December 22, 1994
Office of Applications and Report Services
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
We are transmitting herewith Indiana Gas Company, Inc.'s
Annual Report on Form 10-K for the fiscal year ended
September 30, 1994, pursuant to the requirements of Section
13 of the Securities Exchange Act of 1934.
The $250.00 filing fee was transmitted via FEDWIRE on
December 21, 1994.
Sincerely,
/s/Kathleen S. Morris
Kathleen S. Morris
KSM:rs
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-K
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to
_______________
Commission File Number 1-6494
INDIANA GAS COMPANY, INC.
(Exact name of Registrant as specified in its charter)
INDIANA 35-0793669
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1630 North Meridian Street, Indianapolis, Indiana 46202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 317-926-3351
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest
practicable date.
Common Stock-Without par value 9,080,770 November 30, 1994
Class Number of shares Date
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K ( 229.405 of this
chapter) is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K
[NA].
Table of Contents
Page
Part I
Business
Property
Legal Proceedings
Submission of Matters to a Vote of Security Holders
Executive Officers of the Company
Part II
Market for the Registrant's Common Equity and Related
Stockholder Matters
Selected Financial Data
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants
Part III
Directors and Executive Officers of the Registrant
Executive Compensation
Securities Ownership of Certain Beneficial Owners and
Management
Certain Relationships and Related Transactions
Part IV
Exhibits, Financial Statements Schedules, and Reports on
Form 8-K
Part I
Item 1. Business
(a) General Development of the Business.
Indiana Gas Company, Inc. (company) is an
operating public utility engaged in the business of
providing gas utility service in the state of
Indiana. It was incorporated under the laws of the
state of Indiana on July 16, 1945. All of the
outstanding shares of common stock of the company
are owned by Indiana Energy, Inc. (Indiana Energy),
which is a public holding company.
All of the outstanding capital stock of
Terre Haute Gas Corporation (Terre Haute) and
Richmond Gas Corporation (Richmond) was acquired
by Indiana Energy on July 31, 1990. Both
companies were operating public utilities engaged
in the business of providing gas distribution
services in Indiana. On January 21, 1991, the
company acquired from Indiana Energy all the
outstanding capital stock of Terre Haute and
Richmond. While these companies technically
exist as separate corporate entities, their
business operations have been combined with
Indiana Gas' operations and the companies do
business under the name of Indiana Gas.
(c) Narrative Description of the Business.
At September 30, 1994, Indiana Gas supplied
gas to about 442,000 customers in 281 communities
in 48 of the 92 counties in the state of Indiana.
The service area has a population of
approximately 2 million and contains diversified
manufacturing and agriculture-related
enterprises. The principal industries served
include automotive parts and accessories, feed,
flour and grain processing, metal castings,
aluminum products, gypsum products, electrical
equipment, metal specialties and glass.
The largest communities served include
Muncie, Anderson, Lafayette-West Lafayette,
Bloomington, Terre Haute, Marion, New Albany,
Columbus, Jeffersonville, New Castle and
Richmond. Indiana Gas does not serve in
Indianapolis, although its general office is
located in that city.
For the fiscal year ended September 30,
1994, residential customers provided 59 percent
of revenues, commercial 25 percent and industrial
16 percent. At such date, approximately 98
percent of Indiana Gas' customers used gas for
space heating, and space heating revenues from
these customers for the fiscal year were 79
percent of total operating revenues. Sales of
gas are seasonal and strongly affected by
variations in weather conditions. During the
fiscal year ended September 30, 1994, Indiana Gas
added approximately 10,400 residential and
commercial customers.
Indiana Gas sells gas directly to
residential, commercial and industrial customers
at approved rates. Indiana Gas also transports
gas through its pipelines at approved rates to
commercial and industrial customers which have
purchased gas directly from producers or through
brokers and marketers. The total volumes of gas
provided to both sales and transportation
customers is referred to as throughput.
Gas transported on behalf of end-use
customers in fiscal 1994 represented 26 percent
(30,125 MDth) of throughput compared to 11
percent (12,307 MDth) in 1993 and 13 percent
(13,438 MDth) in 1992. Although revenues are
lower, rates for transportation generally provide
the same margins as would have been earned had
the gas been sold under normal sales tariffs.
As a result of a series of FERC orders,
including Order No. 636, Indiana Gas now
purchases all of its natural gas from producers,
brokers and marketers on both short-term and
medium-term contracts. Indiana Gas also has
contracts with pipelines for storage and
transportation of natural gas.
Rates for gas services purchased from
interstate pipeline suppliers are governed by
tariffs which are subject to adjustment and
approval by the Federal Energy Regulatory
Commission (FERC) in accordance with the Natural
Gas Act. Prices for gas purchased from gas
producers and marketers are determined by market
conditions. Indiana Gas' rates and charges,
terms of service, accounting matters, issuance of
securities, and other operational matters are
regulated by the Indiana Utility Regulatory
Commission (IURC).
Adjustments to Indiana Gas' rates and
charges related to the cost of gas are made
through gas cost adjustment (GCA) procedures
established by Indiana law and administered by
the IURC. The IURC has applied the statute
authorizing the GCA procedures to reduce rates
when necessary so as to limit net operating
income, after adjusting to normal weather, to the
level provided in the last general rate order.
On October 26, 1994, the IURC approved a
stipulation and settlement agreement which
provided, among other things, an increase in
Indiana Gas' authorized utility operating income
from $47.1 million to $51.1 million beginning in
fiscal 1995. (See Item 7, 1995 Settlement
Agreement.)
Information regarding environmental matters
affecting the company is incorporated herein by
reference to Item 7, Environmental Matters.
Indiana Gas had 1,129 full-time employees and 25
part-time employees as of September 30, 1994.
Item 2. Property
The properties of Indiana Gas are used for
the purchase, production, storage and
distribution of gas and are located primarily
within the state of Indiana. As of September 30,
1994, such properties included approximately
9,798 miles of distribution mains; 458,576
meters; seven reservoirs currently being used for
the underground storage of purchased gas with
approximately 108,354 acres of land held under
storage easements; 10,671,831 Dth of gas in
company-owned underground storage with a daily
deliverability of 138,860 Dth; 20,617,050 Dth of
gas in contract storage with a daily
deliverability of 234,618 Dth; and five liquefied
petroleum (propane) air-gas manufacturing plants
with a total daily capacity of 36,700 Dth of gas.
Indiana Gas' capital expenditures during the
fiscal year ended September 30, 1994, amounted to
$57.1 million.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security
Holders
No matter was submitted during the fourth
quarter of the fiscal year ended September 30,
1994, to a vote of security holders.
Item 4a. Executive Officers of the Company
As of September 30, 1994, the following
individuals were Executive Officers of the
company:
<TABLE>
Family
Relation- Office or Date Elected
Name Age ship Position Held Or Appointed(1)
<S> <C> <C> <C> <C>
Lawrence A. Ferger 60 None President and Chief
Executive Officer July 1, 1987
Paul T. Baker 54 None Senior Vice President
and Chief Operating
Officer Aug. 1, 1991
Senior Vice President -
Gas Supply and
Customer Services July 1, 1987
Niel C. Ellerbrook 45 None Senior Vice President and
Chief Financial Officer July 1, 1987
Anthony E. Ard 53 None Vice President -
Corporate Affairs Jan. 11, 1993
Vice President and
Secretary Sep. 30, 1988
Carl L. Chapman 39 None Vice President -
Planning July 1, 1987
(1) Each of the officers has served continuously since the dates indicated.
</TABLE>
Part II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters
All of the outstanding shares of Indiana Gas'
common stock are owned by Indiana Energy, Inc., and
are not traded.
During fiscal 1994, the company paid aggregate
dividends of $5.8 million, $5.8 million, $5.8
million and $6.0 million in the first, second, third
and fourth quarters, respectively.
During fiscal 1993, the company paid aggregate
dividends of $5.1 million, $5.1 million, $5.1
million and $5.8 million in the first, second, third
and fourth quarters, respectively. (See Item 8,
Note 5.)
Item 6. Selected Financial Data
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
(Thousands)
Year Ended September 30 1994 1993 1992 1991 1990(1)
<S> <C> <C> <C> <C> <C>
Operating revenues $475,297 $499,278 $411,260 $389,550 $353,078
Margin 194,309 185,725 160,333 153,037 142,821
Operating expenses 146,466 141,452 122,206 117,421 111,326
Operating income 47,843 44,273 38,127 35,616 31,495
Interest and other - net 13,247 15,739 12,384 12,330 9,238
Net income 34,596 28,534 25,743 23,286 22,257
Dividends on preferred stock - 285 1,710 1,710 1,710
Earnings available for
common stock $ 34,596 $ 28,249 $ 24,033 $ 21,576 $ 20,547
Common shareholder's equity $260,295 $249,099 $202,833 $187,651 $217,704
Redeemable preferred
shareholder's equity - - 20,000 20,000 20,000
Long-term debt (2) 156,851 184,901 149,901 163,775 106,100
$417,146 $434,000 $372,734 $371,426 $343,804
Total throughput 116,285 111,354 101,985 97,503 90,219
Annual heating degree days
as a percent of normal 102% 99% 90% 87% 95%
Customers served at end
of period 441,765 431,334 420,665 411,855 402,875
Total Assets at Year-End $649,982 $621,658 $567,779 $515,468 $493,898
(1) Restated to reflect the acquisition of Terre Haute and Richmond effective
July 31, 1990.
(2) Includes current maturities; excludes sinking fund requirements.
</TABLE>
Item 7. Management's Discussion and Analysis of Results
of Operations and Financial Condition
Results of Operations
Earnings
Earnings available for common stock increased to $34.6
million in 1994 from $28.2 million in 1993. The
increase reflects weather that was 4 percent colder
than last year, additional residential and commercial
customers and a decrease in operation and maintenance
expenses. Earnings available for common stock
increased to $28.2 million in 1993 from $24.0 million
in 1992. This increase was due to implementation of
the October 1992 general rate increase and weather that
was 9 percent colder than the previous year, partially
offset by increased operation and maintenance expenses.
Margins (Revenues Less Cost of Gas)
In 1994, margins increased 5 percent ($8.6 million)
when compared to 1993. The increase reflects weather
that was 4 percent colder than last year and 2 percent
colder than normal, as well as additional residential
and commercial customers.
In 1993, margins increased 16 percent ($25.4 million)
when compared to 1992. The increase reflects a general
rate increase implemented in October 1992, volume
increases driven by additional customers and weather 9
percent colder than the previous year but 1 percent
warmer than normal.
Total system throughput (combined sales and
transportation) increased 4 percent (4.9 MMDth) in 1994
compared to 1993 and increased 9 percent (9.4 MMDth) in
1993 compared to 1992. Indiana Gas' rates for
transportation generally provide the same margins as
are earned on the sale of gas under its sales tariffs.
Approximately one-half of total system throughput
represents gas used for space heating and is affected
by weather.
Total average cost per dekatherm of gas purchased
(average commodity and demand) remained about the same
for 1994 as compared to 1993. Increased fixed costs per
dekatherm associated with pipeline rate cases and the
restructuring prescribed by Federal Energy Regulatory
Commission (FERC) Order No. 636 were offset by lower
commodity costs (see Federal Energy Regulatory
Commission Matters).
Total average cost per dekatherm of gas purchased
increased to $2.90 in 1993 from $2.65 in 1992. The
increase can be attributed to higher commodity costs in
1993 than in the previous year, slightly offset by
increased purchases from producers and marketers.
Operating Expenses
Operation and maintenance expenses decreased
approximately $2.3 million in 1994 when compared to
1993. The decrease is primarily attributable to labor
and related costs which are lower than the levels in
1993 when additional operation and maintenance projects
were in progress.
Operation and maintenance expenses increased
approximately $13.4 million in 1993 compared to 1992.
During 1992 and 1991, Indiana Gas intensified cost
containment programs and also postponed a number of non-
critical operating and maintenance projects in an
effort to partially offset the impact of very warm
weather during those years. With the colder weather of
1993 and the general rate increase came the necessary
financial resources to significantly increase the
expenditures on operations and maintenance, including
those projects previously deferred. Increased
throughput volumes and revenues, better financial
results and higher levels of operation and maintenance
activity resulted in cost increases for labor and
related benefits, including performance-based
compensation, services, materials and supplies,
advertising, collection costs and bad debt expenses.
Depreciation and amortization expense increased in 1994
and 1993 as the result of additions to utility plant to
serve new customers and to maintain dependable service
to existing customers.
Federal and state income taxes increased in 1994 and
1993 due to higher taxable income and an increase in
the federal tax rate resulting from the Omnibus Budget
Reconciliation Act of 1993 (see Income Taxes).
Taxes other than income taxes increased in 1994 and
1993 as the result of increased property tax expense,
due to higher property tax rates and higher assessed
values, and as the result of higher gross receipts tax
expenses.
Interest Expense
Interest expense decreased in 1994 due to slightly
lower interest rates. Interest expense increased in
1993 as the result of increases in average debt
outstanding slightly offset by decreases in interest
rates.
Other Operating Matters
Gas Cost Adjustment
Adjustments to Indiana Gas' rates and charges related
to the cost of gas are made through gas cost adjustment
(GCA) procedures established by Indiana law and
administered by the Indiana Utility Regulatory
Commission (IURC). The GCA passes through increases and
decreases in cost of gas to Indiana Gas' customers
dollar for dollar.
In addition, the IURC has applied the statute
authorizing the GCA procedures to reduce rates when
necessary so as to limit utility operating income,
after adjusting to normal weather, to the level
provided in the last general rate order.
1995 Settlement Agreement
During 1994, Indiana Gas, the Office of Utility
Consumer Counselor (OUCC) and a group of large-volume
users entered a series of negotiations designed to
increase Indiana Gas' opportunity to earn on its recent
capital investments while avoiding the necessity of a
general rate filing. As a result of these negotiations,
the IURC approved on October 26, 1994, a stipulation
and settlement agreement which provided, among other
things, for the following: (1) an increase in Indiana
Gas' authorized utility operating income from $47.1
million to $51.1 million beginning in fiscal 1995; (2)
with certain specified exceptions, Indiana Gas may not
file a petition to increase its base rates until
September 1, 1995; and (3) an agreement to a number of
operational and other service enhancements for large-
volume customers.
Furthermore, as part of the agreement, the OUCC agreed
to perform another investigation during fiscal year
1995 to consider an additional increase to Indiana Gas'
authorized utility operating income.
Environmental Matters
In the past, Indiana Gas and others, including its
predecessors, former affiliates and/or previous
landowners, operated facilities for the manufacturing
of gas and storage of manufactured gas. These
facilities are no longer in operation and have not been
operated for many years. In the manufacture and storage
of such gas, various byproducts were produced, some of
which may still be present at the sites where these
manufactured gas plants and storage facilities were
located. While management believes those operations
were conducted in accordance with the then-applicable
industry standards, under currently applicable
environmental laws and regulations, Indiana Gas, and
the others, may now be required to take remedial action
if certain materials are found at these sites.
Indiana Gas has identified the existence, location and
certain general characteristics of 26 gas manufacturing
and storage sites. Various stages of investigation and
remediation activities are under way at these sites.
Indiana Gas has deferred all environmental costs
previously paid or accrued. These costs are
approximately $12 million (including assessment,
remediation and related costs) as of September 30,
1994.
The impact of complying with federal, state and local
environmental regulations related to former
manufactured gas plant sites on Indiana Gas' financial
position and results of operations is contingent upon
several uncertainties. These include the cost of
compliance, the impact of joint and several liability
upon the magnitude of the contingency, the ratemaking
treatment authorized for these items by the IURC, as
well as the recovery of environmental and related costs
from insurance carriers.
Indiana Gas believes it will be successful in
recovering the costs which it has incurred and may
incur through rates, from other potentially responsible
parties and from insurance carriers. However, there can
be no assurance as to the amount or timing of any such
recoveries.
For further information regarding the status of
investigation and remediation of the sites, financial
reporting, ratemaking and other potentially responsible
parties, see Item 8, Note 10.
Federal Energy Regulatory Commission Matters
In accordance with FERC Order No. 636, Indiana Gas'
pipeline service providers have made a number of
filings to restructure services. On May 1, 1993,
Panhandle Eastern Pipe Line Company implemented a
restructured services tariff. Texas Eastern
Transmission Corporation's restructured tariff was
implemented June 1, 1993. Indiana Gas' remaining
pipeline service providers implemented restructured
services on November 1, 1993. Indiana Gas' pipeline
service providers have begun to seek from customers,
including Indiana Gas, recovery of certain costs
related to the transition to restructured services.
Those costs will include certain gas supply realignment
costs and are not currently expected to exceed $10
million.
In a recent order involving another gas utility in
Indiana, the IURC determined that FERC Order No. 636
transition costs are recoverable as gas costs through
the quarterly GCA process. Given this determination,
Indiana Gas expects that transition costs it is
assessed by its pipeline suppliers will be recovered
through the quarterly GCA process.
Indiana Gas continues to monitor developments
concerning these and other pipeline issues, to
participate in related negotiations and to represent
its interest in pipeline matters before FERC.
Postretirement Benefits Other Than Pensions
Effective October 1, 1993, Indiana Gas adopted
Statement of Financial Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits Other
Than Pensions (SFAS 106). SFAS 106 requires accounting
for the costs of postretirement health care and life
insurance benefits on the accrual basis. This means the
costs of benefits paid in the future are recognized
during the years that an employee provides service to
Indiana Gas rather than the "pay-as-you-go" (cash)
basis (see Item 8, Note 7).
In January 1992, Indiana Gas filed a petition with the
IURC seeking regulatory authority for, among other
matters, rate recovery of implementation of SFAS 106.
Through a generic order issued on December 30, 1992,
Indiana Gas received authority from the IURC to employ
deferred accounting for these costs. This authorization
will extend until the IURC rules upon Indiana Gas'
pending request to adopt SFAS 106 for ratemaking
purposes. Indiana Gas' order is not expected until
later in calendar 1994, however, recent orders for
other public utilities regulated by the IURC have
authorized SFAS 106 to be adopted for ratemaking
purposes.
Postemployment Benefits
In November 1992, the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards No. 112, Employers' Accounting for
Postemployment Benefits (SFAS 112). The statement will
be adopted by Indiana Gas effective October 1, 1994.
SFAS 112 requires employers to adopt accrual accounting
for workers' compensation, disability, severance pay
and other benefits provided to former or inactive
employees after employment but before retirement.
Adoption of the statement will not materially affect
Indiana Gas' financial position or results of
operations.
Income Taxes
A federal corporate tax rate of 35 percent, resulting
from the Omnibus Budget Reconciliation Act of 1993, was
in effect for all of the company's fiscal year of 1994
as compared to a weighted average federal corporate tax
rate of 34.75 percent in 1993. The federal corporate
tax rate in effect for fiscal 1992 was 34 percent.
Effective October 1, 1993, Indiana Gas adopted
Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS 109). Indiana Gas
previously used the deferred method of accounting for
income taxes as prescribed by Accounting Principles
Bulletin Opinion No. 11. SFAS 109 requires the use of
the liability method, which effectively results in a
reduction in previously provided deferred income taxes
to reflect the current statutory corporate tax rate.
Due to the effects of regulation, Indiana Gas is not
permitted to recognize the effect of a tax rate change
as income but is required to reduce tariff rates to
return the "excess" deferred income taxes to ratepayers
over the remaining life of the properties that give
rise to the taxes. Therefore, the cumulative effect of
a change in accounting principle upon the initial
application of SFAS 109 resulted in no impact on
earnings.
Liquidity and Capital Resources
New construction to provide service to a growing
customer base and normal system maintenance and
improvements will continue to require substantial
capital expenditures. Indiana Gas' goal is to
internally fund approximately 75 percent of its capital
expenditure program. This will help Indiana Gas to
maintain its high creditworthiness. The long-term debt
of Indiana Gas is currently rated Aa3 by Moody's
Investors Service and AA- by Standard & Poor's
Corporation and Duff & Phelps.
Total capital required to fund both capital
expenditures and refinancing requirements for 1993 and
1994, along with estimated amounts for 1995 through
1997, are as follows:
Thousands 1993 1994 1995 1996 1997
Capital expenditures $57,000 $57,100 $54,700 $56,600 $61,600
Refinancing requirements 20,000 28,100 200 200 200
$77,000 $85,200 $54,900 $56,800 $61,800
In 1994, 75 percent of Indiana Gas' capital
expenditures was provided by funds generated internally
(net income less dividends plus charges to net income
not requiring funds). In 1993, 62 percent of capital
expenditures was provided by funds generated
internally. This percentage was lower than the target
as a result of completing significant upgrades to the
gas distribution system to allow for greater operating
flexibility in the FERC Order 636 environment.
Capitalization objectives for Indiana Gas are 55-65
percent common equity and preferred stock and 35-45
percent long-term debt. Indiana Gas' common equity
component was 62 percent of total capitalization at
September 30, 1994.
In 1994, externally funded capital expenditures and the
redemptions discussed below were financed primarily
through short-term debt and changes in working capital.
No significant permanent financing was done during the
year.
On October 15, 1993, $10 million of 9.30% medium-term
notes were redeemed.
On September 15, 1994, $10 million of 6.80% Notes,
Series C, were redeemed.
During September 1994, $8.05 million of the outstanding
9 3/8% Series M, First Mortgage Bonds were retired.
Indiana Gas received an order on August 17, 1994, from
the IURC for authorization to issue up to $125 million
in the aggregate in the form of debt securities and
common stock or a combination thereof. Indiana Gas
intends to implement a medium-term note program during
fiscal 1995.
The nature of Indiana Gas' business creates large short-
term cash working capital requirements primarily to
finance customer accounts receivable, unbilled utility
revenues resulting from cycle billing, gas in
underground storage and capital expenditures until
permanently financed. Short-term borrowings tend to be
greatest during the heating season when accounts
receivable and unbilled utility revenues are at their
highest. Depending on cost, commercial paper or bank
lines of credit are used as sources of short-term
financing. Indiana Gas' commercial paper is rated P-1
by Moody's and A-1+ by Standard & Poor's. Long-term
financial strength and flexibility require maintaining
throughput volumes, controlling costs and, if
absolutely necessary, securing timely increases in
rates to recover costs and provide a fair and
reasonable return to shareholders.
Item 8. Financial Statements and Supplementary Data
Management's Responsibility for Financial Statements
The management of the company is responsible for the
preparation of the consolidated financial statements and
the related financial data contained in this report. The
financial statements are prepared in conformity with
generally accepted accounting principles and follow
accounting policies and principles applicable to
regulated public utilities.
The integrity and objectivity of the data in this
report, including required estimates and judgements, are
the responsibility of management. Management maintains a
system of internal controls and utilizes an internal
auditing program to provide reasonable assurance of
compliance with company policies and procedures and the
safeguard of assets.
The board of directors pursues its responsibility for
these financial statements through its audit committee,
which meets periodically with management, the internal
auditors and the independent auditors, to assure that
each is carrying out its responsibilities. Both the
internal auditors and the independent auditors meet with
the audit committee, with and without management
representatives present, to discuss the scope and
results of their audits, their comments on the adequacy
of internal accounting controls and the quality of
financial reporting.
/s/Niel C. Ellerbrook
Niel C. Ellerbrook
Senior Vice President and
Chief Financial Officer
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Indiana
Gas Company, Inc.:
We have audited the accompanying consolidated balance
sheets and schedules of long-term debt of Indiana Gas
Company, Inc. (an Indiana corporation and wholly-owned
subsidiary of Indiana Energy, Inc.) and subsidiary
companies as of September 30, 1994 and 1993, and the
related consolidated statements of income, common
shareholder's equity and cash flows for each of the
three years in the period ended September 30, 1994.
These financial statements are the responsibility of the
company's management. Our responsibility is to express
an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Indiana Gas Company, Inc. and
subsidiary companies, as of September 30, 1994, and
1993, and the results of their operations and their cash
flows for each of the three years in the period ended
September 30, 1994, in conformity with generally
accepted accounting principles.
/s/Arthur Andersen LLP
Arthur Andersen LLP
Indianapolis, Indiana
October 28, 1994
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands)
Year Ended September 30
1994 1993 1992
<S> <C> <C> <C>
OPERATING REVENUES $ 475,297 $ 499,278 $ 411,260
COST OF GAS 280,988 313,553 250,927
MARGIN 194,309 185,725 160,333
OPERATING EXPENSES:
Other operation and maintenance 81,982 84,302 70,866
Depreciation and amortization 29,177 26,806 25,136
Income taxes 19,467 15,816 13,892
Taxes other than income taxes 15,840 14,528 12,312
146,466 141,452 122,206
OPERATING INCOME 47,843 44,273 38,127
OTHER INCOME - NET 2,629 579 1,893
INCOME BEFORE INTEREST AND OTHER 50,472 44,852 40,020
INTEREST AND OTHER CHARGES:
Interest on long-term debt 14,798 15,304 13,885
Interest on notes payable 493 447 222
Allowance for borrowed funds used
during construction (355) (579) (481)
Other interest 746 889 449
Other amortization 194 257 202
15,876 16,318 14,277
NET INCOME 34,596 28,534 25,743
DIVIDENDS ON PREFERRED STOCK - 285 1,710
EARNINGS AVAILABLE FOR COMMON STOCK $ 34,596 $ 28,249 $ 24,033
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
Year Ended September 30
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 34,596 $ 28,534 $ 25,743
Adjustments to reconcile net income to cash
provided from operating activities -
Depreciation and amortization 29,371 27,063 25,338
Deferred income taxes 3,273 2,931 2,073
Investment tax credit (930) (1,007) (929)
31,714 28,987 26,482
Changes in assets and liabilities -
Receivables - net 4,121 (2,849) (1,401)
Inventories (5,093) (10,638) (19,188)
Accounts payable, customer deposits, advance
payments and other current liabilities (7,052) 10,676 9,645
Accrued taxes and interest (11,815) 10,410 5,506
Refundable/recoverable gas costs 39,048 (17,123) 6,805
Other - net 2,771 (4,000) (1,385)
Total adjustments 53,694 15,463 26,464
Net cash flows from operations 88,290 43,997 52,207
CASH FLOWS FROM (REQUIRED FOR) FINANCING ACTIVITIES:
Issuance of common stock - 40,000 10,000
Redemption of preferred stock - (20,932) -
Sale of long-term debt - 35,000 -
Reduction in long-term debt (28,050) - (14,094)
Net change in short-term borrowings 20,298 (19,986) 28,088
Dividends (23,400) (21,336) (20,561)
Net cash flows from (required for) financing activities (31,152) 12,746 3,433
CASH FLOWS REQUIRED FOR INVESTING ACTIVITIES:
Capital expenditures (57,138) (56,945) (59,060)
Net cash flows required for investing activities (57,138) (56,945) (59,060)
NET DECREASE IN CASH - (202) (3,420)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 20 222 3,642
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 20 $ 20 $ 222
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Thousands)
September 30
1994 1993
<S> <C> <C>
UTILITY PLANT:
Original cost $824,839 $773,174
Less - accumulated depreciation and amortization 291,823 267,629
533,016 505,545
NONUTILITY PLANT - NET 393 234
CURRENT ASSETS:
Cash and cash equivalents 20 20
Accounts receivable, less reserves of
$1,238 and $2,055 respectively 14,251 14,231
Accrued unbilled revenues 6,607 10,748
Materials and supplies - at average cost 3,663 3,710
Liquefied petroleum gas - at average cost 940 1,019
Gas in underground storage - at last-in,
first-out cost 64,753 59,534
Recoverable gas costs - 7,453
Prepayments and other 244 296
90,478 97,011
DEFERRED CHARGES:
Unamortized debt discount and expense 6,755 6,614
Environmental costs (see Note 10) 11,925 9,045
Other 7,415 3,209
26,095 18,868
$649,982 $621,658
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
SHAREHOLDER'S EQUITY AND LIABILITIES
(Thousands)
September 30
1994 1993
<S> <C> <C>
CAPITALIZATION:
Common stock and paid-in capital $142,995 $142,995
Retained earnings 117,300 106,104
Total common shareholder's equity 260,295 249,099
Long-term debt (see schedule) 156,851 164,901
417,146 414,000
CURRENT LIABILITIES:
Maturities and sinking fund requirements
of long-term debt - 20,000
Notes payable 30,550 10,252
Accounts payable 34,808 41,602
Refundable gas costs 31,595 -
Customer deposits and advance payments 12,594 13,466
Accrued taxes 20,291 31,579
Accrued interest 2,815 3,342
Other current liabilities 14,055 13,441
146,708 133,682
DEFERRED CREDITS:
Deferred income taxes (see Note 11) 59,887 56,911
Unamortized investment tax credit 13,033 13,963
Regulatory liability (see Note 11) 4,787 -
Customer advances for construction 1,162 998
Other 7,259 2,104
86,128 73,976
COMMITMENTS AND CONTINGENCIES (see Notes 9 and 10) - -
$649,982 $621,658
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER'S EQUITY
(Thousands except shares)
COMMON STOCK AND
PAID-IN CAPITAL RETAINED
SHARES AMOUNT EARNINGS TOTAL
<S> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1991 7,320,827 $ 92,995 $ 94,656 $187,651
Net Income 25,743 25,743
8.55% Cumulative Preferred Stock
Dividends (1,710) (1,710)
Common Stock Dividends
($2.52 per share) (18,851) (18,851)
Common Stock Issuances
to Indiana Energy, Inc. 357,910 10,000 10,000
BALANCE AT SEPTEMBER 30, 1992 7,678,737 102,995 99,838 202,833
Net Income 28,534 28,534
8.55% Cumulative Preferred Stock
Dividends (285) (285)
Common Stock Dividends
($2.66 per share) (21,051) (21,051)
Common Stock Issuances
to Indiana Energy, Inc. 1,402,033 40,000 40,000
Premium on Redemption
of Preferred Stock (932) (932)
BALANCE AT SEPTEMBER 30, 1993 9,080,770 142,995 106,104 249,099
Net Income 34,596 34,596
Common Stock Dividends
($2.58 per share) (23,400) (23,400)
BALANCE AT SEPTEMBER 30, 1994 9,080,770 $142,995 $ 117,300 $260,295
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED SCHEDULES OF LONG-TERM DEBT
(Thousands)
September 30
1994 1993
<S> <C> <C>
LONG-TERM DEBT:
First Mortgage Bonds
9 3/8% Series M, due July 15, 2016 $ 21,950 $ 30,000
Unsecured Notes Payable
9.30%, due October 15, 1993 - 10,000
6.80% Series C, due September 15, 1994 - 10,000
6 5/8% Series D, due December 1, 1997 35,000 35,000
8.90%, due July 15, 1999 10,000 10,000
9 3/8%, due January 15, 2021 25,000 25,000
9 1/8% Series A, due February 15, 2021 40,000 40,000
8 1/2% Series B Debentures, due September 15, 2021 24,901 24,901
134,901 154,901
156,851 184,901
Less - Maturities and sinking fund requirements - 20,000
$156,851 $164,901
The accompanying notes are an integral part of these statements.
</TABLE>
Notes to Consolidated Financial Statements
Indiana Gas Company, Inc. and Subsidiary Companies
1. Summary of Significant Accounting Practices
A. Consolidation
Indiana Gas Company, Inc. (Indiana Gas) and its
subsidiaries, Terre Haute Gas Corporation (Terre
Haute) and Richmond Gas Corporation (Richmond) which
are doing business as Indiana Gas Company, Inc.
(company), provide natural gas and transportation
services to a diversified base of customers in 281
communities in 48 of Indiana's 92 counties.
B. Utility Plant and Depreciation
Except as described below, utility plant is stated at
the original cost and includes allocations of payroll-
related costs and administrative and general
expenses, as well as an allowance for the cost of
funds used during construction. When a depreciable
unit of property is retired, the cost is credited to
utility plant and charged to accumulated depreciation
together with the cost of removal, less any salvage.
No gain or loss is recognized upon normal retirement.
Provisions for depreciation of utility property are
determined by applying straight-line rates to the
original cost of the various classifications of
property. The average depreciation rate was
approximately 4.1 percent for 1994, 1993 and 1992.
Cost in excess of underlying book value of acquired
gas distribution companies is reflected as a
component of utility plant and is being amortized
primarily over 40 years.
C. Unamortized Debt Discount and Expense
As part of an August 17, 1994, order from the Indiana
Utility Regulatory Commission (IURC), Indiana Gas
received authority to amortize over a 15-year period
the debt discount and expense related to new debt
issues and future premiums paid for debt reacquired
in connection with refinancing. Debt discount and
expense for issues in place prior to this order are
being amortized over the lives of the related issues.
Premiums paid prior to this order for debt reacquired
in connection with refinancing are being amortized
over the life of the refunding issue. Gains or losses
realized from reacquisition of debt for sinking fund
purposes are included in "Other Income - Net" on the
Consolidated Statements of Income.
D. Cash Flow Information
For the purposes of the Consolidated Statements of
Cash Flows, the company considers cash investments
with an original maturity of three months or less to
be cash equivalents. Cash paid during the periods
reported for interest and income taxes were as
follows:
Thousands 1994 1993 1992
Interest (net of amount capitalized) $15,192 $13,994 $13,637
Income taxes $23,880 $11,739 $ 7,317
E. Revenues
To more closely match revenues and expenses, Indiana
Gas records revenues for all gas delivered to
customers but not billed at the end of the accounting
period.
F. Gas in Underground Storage
Based on the cost of purchased gas during September
1994, the cost of replacing the current portion of
gas in underground storage was less than last-in,
first-out cost at September 30, 1994, by
approximately $7,164,000.
G. Refundable or Recoverable Gas Cost
The cost of gas purchased and refunds from suppliers,
which differ from amounts recovered through rates,
are deferred and are being recovered or refunded in
accordance with procedures approved by the IURC.
H. Allowance For Funds Used During Construction
An allowance for funds used during construction
(AFUDC), which represents the cost of borrowed and
equity funds used for construction purposes, is
charged to construction work in progress during the
period of construction and the equity portion is
included in "Other Income - Net" on the Consolidated
Statements of Income. The portion related to borrowed
funds is included in "Interest and Other Charges".
An annual AFUDC rate of 7.5 percent was used in 1994
and 1993, however, in 1992 the rate was 10 percent
due primarily to higher interest rates.
The table below reflects the total AFUDC capitalized
and the portion of which was computed on borrowed and
equity funds for all periods reported.
Thousands 1994 1993 1992
AFUDC - borrowed funds $ 355 $ 579 $ 481
AFUDC - equity funds 290 486 617
Total AFUDC capitalized $ 645 $ 1,065 $1,098
I. Capital Expenditures
Indiana Gas' utility capital expenditure requirements
for 1994 were $57.1 million and are estimated to be
about $54.7 million for 1995. Capital expenditure
programs are funded by internally generated funds,
short-term borrowings and permanent financing.
J. Reclassifications
Certain reclassifications have been made in the
company's financial statements of prior years to
conform to the current year presentation. These
reclassifications have no impact on previously
reported net income.
2. Fair Value of Financial Instruments
The estimated fair values of Indiana Gas' financial
instruments were as follows:
September 30, 1994 September 30, 1993
Carrying Fair Carrying Fair
Thousands Amount Value Amount Value
Cash and cash equivalents $ 20 $ 20 $ 20 $ 20
Notes payable $ 30,550 $ 30,550 $ 10,252 $ 10,252
Long-term debt (includes amounts
due within one year) $156,851 $160,612 $184,901 $212,500
Certain methods and assumptions must be used to
estimate the fair value of financial instruments.
Because of the short maturity of cash and cash
equivalents and notes payable, the carrying amounts
approximate fair values for these financial
instruments. The fair value of the company's long-
term debt was estimated based on the quoted market
prices for the same or similar issues or on the
current rates offered to the company for debt of the
same remaining maturities.
Under current regulatory treatment, call premiums on
reacquisition of long-term debt are generally
recovered in customer rates over the life of the
refunding issue or over a 15-year period (see Note
1C). Accordingly, any reacquisition would not be
expected to have a material effect on the company's
financial position or results of operations.
3. Short-Term Borrowings
Indiana Gas has board of director approval to borrow
up to $100 million under bank lines of credit.
Indiana Gas has available committed lines of credit
up to $60 million with approximately $31 million
outstanding at September 30, 1994. These lines of
credit are renewable annually and require fees based
on the amounts of the lines. In addition, Indiana Gas
has available uncommitted lines of credit with
similar arrangements which allow it to borrow up to
its board approved amount. Notes payable to banks
bore interest at rates negotiated with the bank at
the time of borrowing.
Bank loans outstanding during the reported periods
were as follows:
<TABLE>
Thousands 1994 1993 1992
<S> <C> <C> <C>
Outstanding at year end $30,550 $10,252 $30,238
Weighted average interest rates at year end 4.9% 3.6% 3.5%
Weighted average interest rates during the year 3.3% 3.6% 4.2%
Weighted average total outstanding during the year $14,891 $12,533 $ 8,594
Maximum total outstanding during the year $56,500 $77,379 $30,238
</TABLE>
4. Long-Term Debt
During the year the following activity took place
with respect to long-term debt.
On October 15, 1993, $10 million of 9.30% medium-term
notes were redeemed.
On September 15, 1994, $10 million of 6.80% Notes,
Series C, were redeemed.
During September 1994, $8.05 million of the
outstanding 9 3/8% Series M, First Mortgage Bonds
were retired. A premium of $641,000 was paid for
this retirement and will be amortized over a 15-year
period.
Consolidated maturities and sinking fund requirements
on long-term debt subject to mandatory redemption
during the five years following 1994 are none for
1995 and 1996, $1,100,000 in 1997, $36,100,000 in
1998 and $11,100,000 in 1999.
5. Common Stock
Indiana Gas has authorized 16 million shares of no
par value common stock.
Dividends on the common stock of Indiana Gas are
payable out of the unreserved and unrestricted
retained earnings of Indiana Gas. There are certain
provisions in the Indiana Gas Indenture, under which
the first mortgage bonds of Indiana Gas have been
created and issued, restricting the payment of
dividends on the Indiana Gas common stock. Such
restrictions could affect Indiana Gas' ability to pay
dividends on its common stock. None of the retained
earnings of Indiana Gas are presently subject to any
such restrictions.
6. Cumulative Preferred Stock
On December 1, 1992, Indiana Gas redeemed all 200,000
shares of its issued and outstanding 8.55% Cumulative
Preferred Stock at $104.66 per share with accrued
dividends. The redemption premium of $932,000 was
charged to retained earnings. Indiana Gas has
authorized and unissued shares of preferred stock of
4.2 million.
7. Retirement Plans and Other Postretirement Benefits
Effective October 1, 1994, Indiana Gas merged its
retirement savings plan for bargaining employees into
its retirement savings plan for non-bargaining
employees. The primary objective for this action is
to reduce the level of resources required to
administer two plans. The combined retirement savings
plan is a defined contribution plan which is
qualified under sections 401(a) and 401(k) of the
Internal Revenue Code. Under the terms of the
retirement savings plan, eligible participants may
direct a specified percentage of their compensation
to be invested in shares of Indiana Energy's common
stock, a fixed income fund, an equity fund or a
balanced fund. Participants in the retirement savings
plan have, subject to prescribed limitations,
matching company contributions made to the plan on
their behalf, plus a year-end lump sum company
contribution. During 1994, 1993 and 1992, Indiana Gas
made contributions of $2,386,000, $2,270,000 and
$2,072,000, respectively.
Indiana Gas also has two non-contributory defined
benefit retirement plans that cover all employees
meeting certain minimum age and service requirements.
Benefits are determined by a formula based on the
employee's base earnings (highest five consecutive
years out of the last 10 consecutive years prior to
actual retirement date), years of participation in
the plan and the employee's age at retirement.
Indiana Gas has an unfunded supplemental retirement
plan for certain management employees. Benefits are
determined by a formula based on 65 percent of the
participant's average monthly earnings, less benefits
received under the company's pension and savings
plans and the participant's primary Social Security
benefits.
The Indiana Gas defined benefit retirement plan
assets are under custody of trustees and consist of
actively managed stock and bond portfolios, as well
as short-term investments. It is Indiana Gas' funding
policy to maintain the pension plans on an
actuarially sound basis. Under this policy, funding
was $1,110,000 in 1994, $1,223,000 in 1993, and
$1,666,000 in 1992. As permitted by the Statement of
Financial Accounting Standards No. 71, Accounting for
the Effects of Certain Types of Regulation, the
company recognizes pension expense based on funding
as allowed for ratemaking purposes.
The calculation of pension expense follows:
<TABLE>
Thousands 1994 1993 1992
<S> <C> <C> <C>
Pension benefits earned during the period $1,436 $1,366 $1,258
Interest accrued on projected pension benefit
obligation 4,752 4,713 4,543
Actual return on pension plan assets 9 (3,563) (6,152)
Net amortization and deferral (6,056) (2,392) 369
SFAS 87 pension expense 141 124 18
Adjustment to reflect amount included in rates 492 1,877 3,640
Total pension expense $ 633 $2,001 $3,658
</table
The following table reconciles the plans' SFAS 87
funded status at September 30 with amounts recorded
in the company's financial statements. Certain assets
and obligations of the plans are deferred and
recognized in the financial statements in subsequent
periods.
Thousands 1994 1993
Actuarial present value of pension benefits:
Vested benefits $52,127 $51,753
Nonvested benefits 248 204
Effect of future salary increases 6,751 10,478
Projected pension benefit obligation 59,126 62,435
Plan assets at fair value 64,099 67,347
Plan assets in excess of projected
pension benefit obligation at September 30 4,973 4,912
Unrecognized adjusted prior service costs 2,136 2,616
Unrecognized net assets at date of initial
application (2,393) (2,701)
Unrecognized net (gain) loss (3,007) (4,153)
Adjustment to reflect amount included in rates (1,806) (1,313)
Prepaid (accrued) pension cost at September 30 $ (97) $ (639)
The weighted-average discount rate used in
determining the actuarial present value of the SFAS
87 projected benefit obligation was 8 percent. The
expected long-term rate of return on assets was 9
percent. These rates were used for all years
reported. The average rate of increase in future
compensation levels used ranged from 5 to 5.5 percent
for 1994, and from 5.5 to 8 percent for 1993. The
average future service of plan participants used to
compute amortization of the net assets existing at
the date of initial application of SFAS 87 is
approximately 17 years.
In addition to providing pension benefits, Indiana
Gas presently provides postretirement health care and
life insurance benefits to full-time employees who
have completed 10 years of service and retire from
the company. The plan pays stated percentages of most
reasonable and necessary medical expenses incurred by
retirees, after subtracting payments by other
providers and after a stated deductible has been met.
These benefits are principally self-insured.
Currently, Indiana Gas does not fund this
postretirement plan.
Effective October 1, 1993, Indiana Gas adopted
Statement of Financial Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits
Other Than Pensions (SFAS 106). SFAS 106 requires
accounting for the costs of postretirement health
care and life insurance benefits on the accrual
basis. This means the costs of benefits paid in the
future are recognized during the years that an
employee provides service to Indiana Gas rather than
the "pay-as-you-go" (cash) basis. Indiana Gas has
elected to amortize the unfunded transition
obligation as of October 1, 1993, of approximately
$55 million over a period of 20 years.
Net postretirement benefit cost for 1994 consisted of
the following components:
</TABLE>
<TABLE>
Thousands 1994
<S> <C>
Service cost - benefits attributed to service during the period $1,490
Interest cost on accumulated postretirement obligation 3,915
Amortization of transition obligation 2,772
Net postretirement benefit cost 8,177
Amounts deferred pending rate recognition 5,436
Actual cash payments $2,741
</TABLE>
Prior to fiscal 1994, Indiana Gas recognized
postretirement benefit costs on the pay-as-you-go
(cash) basis. Postretirement benefit costs recognized
for fiscal years 1993 and 1992 were approximately
$2,855,000 and $2,653,000, respectively.
The following table reconciles the plan's funded
status to the accrued postretirement benefit cost as
reflected on the balance sheet as of September 30,
1994:
Thousands 1994
Accumulated postretirement benefit obligation:
Retirees and dependents $28,328
Other fully eligible participants 7,323
Other active participants 18,113
Total accumulated postretirement benefit obligation 53,764
Fair value of plan assets -
Accumulated postretirement benefit obligation in
excess of plan assets (53,764)
Unrecognized net gain (4,340)
Unrecognized transition obligation 52,668
Accrued postretirement benefit cost at September 30 $(5,436)
The assumed health care cost trend rate for medical
gross eligible charges used in measuring the
accumulated postretirement benefit obligation as of
September 30, 1994, was 10.2 percent for fiscal 1995.
This rate is assumed to decrease gradually through
fiscal 2003 to 5.5 percent and remain at that level
thereafter. A 1 percent increase in the assumed
health cost trend rates for each future year produces
approximately a $6.4 million increase in the
accumulated postretirement benefit obligation as of
September 30, 1994, and approximately an $884,000
increase in the annual aggregate of the service and
interest cost components of net postretirement
benefit cost. The weighted-average discount rate used
in determining the accumulated postretirement benefit
obligation was 8 percent.
In January 1992, Indiana Gas filed a petition with
the IURC seeking regulatory authority for, among
other matters, rate recovery of implementation of
SFAS 106 relating to postretirement benefits other
than pensions. Through a generic order issued on
December 30, 1992, Indiana Gas received authority
from the IURC to employ deferred accounting for these
costs. This authorization will extend until the IURC
rules upon Indiana Gas' pending request to adopt SFAS
106 for ratemaking purposes. Indiana Gas' order is
not expected until later in calendar 1994, however,
recent orders for other public utilities regulated by
the IURC have authorized SFAS 106 to be adopted for
ratemaking purposes.
8. Postemployment Benefits
In November 1992, the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards No. 112, Employers' Accounting for
Postemployment Benefits (SFAS 112). The statement
will be adopted by Indiana Gas effective October 1,
1994. SFAS 112 requires employers to adopt accrual
accounting for workers' compensation, disability,
severance pay and other benefits provided to former
or inactive employees after employment but before
retirement. Adoption of the statement will not
materially affect Indiana Gas' financial position or
results of operations.
9. Commitments
Estimated capital expenditures for 1995 are $54.7
million. Total lease expense was $2,595,000 in 1994,
$2,846,000 in 1993 and $2,748,000 in 1992.
Lease commitments are $2,497,000 in 1995, $1,797,000
in 1996, $1,220,000 in 1997, $1,166,000 in 1998,
$515,000 in 1999 and $1,005,000 in total for all
later years. Included in these amounts is an
operating lease between Indiana Gas and Energy Realty
with payments of approximately $464,000 annually that
extends through August 1998. There are no leases that
extend beyond 2002. Indiana Gas has storage and
supply contracts that range from one month to eight
years.
10. Contingencies
A. Environmental Costs
In the past, Indiana Gas and others, including its
predecessors, former affiliates and/or previous
landowners, operated facilities for the manufacturing
of gas and storage of manufactured gas. These
facilities are no longer in operation and have not
been operated for many years. In the manufacture and
storage of such gas, various byproducts were
produced, some of which may still be present at the
sites where these manufactured gas plants and storage
facilities were located. While management believes
those operations were conducted in accordance with
the then-applicable industry standards, under
currently applicable environmental laws and
regulations, Indiana Gas, and the others, may now be
required to take remedial action if certain materials
are found at these sites.
Indiana Gas has identified the existence, location
and certain general characteristics of 26 gas
manufacturing and storage sites. Indiana Gas
conducted remediation at two sites and is nearing
completion of the remedial investigation/feasibility
study (RI/FS) at one of the sites under an agreed
order between Indiana Gas and the Indiana Department
of Environmental Management.
Indiana Gas is assessing, on a site-by-site basis,
whether any of the remaining 24 sites require
remediation, to what extent it is required and the
estimated cost of such action. Indiana Gas has
completed preliminary assessments (PAs) on the
majority of these sites and has completed site
investigations (SIs) at 15 of these sites. Based upon
the site work completed to date, Indiana Gas believes
that some level of contamination may be present at a
number of the remaining sites. Indiana Gas has not
begun an RI/FS at any of the remaining sites but
anticipates beginning more in the near future and
completing the remaining SIs.
Based upon the work performed to date, Indiana Gas
has accrued remediation and related costs for the two
sites where remediation has taken place. Indiana Gas
has accrued the PA/SI and groundwater monitoring
costs for the remaining 24 sites. Indiana Gas has
further accrued estimated RI/FS costs and the costs
of certain remedial actions at a number of the
remaining sites where, based upon available
information, these actions likely will be required.
The total costs which may be incurred in connection
with the remediation of all sites cannot be
determined at this time.
Indiana Gas has nearly completed the process of
identifying all potentially responsible parties
(PRPs) for each site. Indiana Gas, with the help of
outside counsel, has prepared estimates for its share
of environmental liabilities which may exist at each
of the sites. Indiana Gas has accrued only its
proportionate share of the estimated costs, as
described above, based on equitable principles
derived from case law or applied by parties in
achieving settlements.
Indiana Gas accrues for costs associated with
environmental remediation obligations when such costs
are probable and reasonably estimable. Indiana Gas
does not believe it can provide an estimate of the
reasonably possible total remediation costs for any
site prior to completion of the RI/FS and the
development of some sense of the timing for
implementation of the resulting potential remedial
alternatives.
Indiana Gas has notified insurance carriers of
potential claims where policies may provide coverage
for these environmental costs. Indiana Gas has not
recorded any receivables related to probable recovery
from insurance carriers at this time.
In January 1992, Indiana Gas filed a petition with
the IURC seeking regulatory authority for, among
other matters, recovery through rates of all costs
Indiana Gas incurs in complying with federal, state
and local environmental regulations in connection
with past gas manufacturing activities. On February
26, 1992, Indiana Gas received authority from the
IURC to employ deferred accounting for these costs.
This authorization will extend until the IURC rules
upon Indiana Gas' pending request to establish and
implement an ongoing ratemaking mechanism that will
be designed and intended to provide for the recovery
of these costs. An order is not expected until later
in calendar 1994. Indiana Gas has deferred all
environmental costs previously paid or accrued. These
costs are approximately $12 million (including
assessment, remediation and related costs) as of
September 30, 1994.
The impact of complying with federal, state and local
environmental regulations related to former
manufactured gas plant sites on Indiana Gas'
financial position and results of operations is
contingent upon several uncertainties. These include
the cost of compliance, the impact of joint and
several liability upon the magnitude of the
contingency, the ratemaking treatment authorized for
these items by the IURC, as well as the recovery of
environmental and related costs from insurance
carriers.
Indiana Gas believes it will be successful in
recovering the costs which it has incurred and may
incur through rates, from other potentially
responsible parties and from insurance carriers.
However, there can be no assurance as to the amount
or timing of any such recoveries.
B. Order No. 636 Transition Costs
In accordance with Federal Energy Regulatory
Commission (FERC) Order No. 636, Indiana Gas'
pipeline service providers have made a number of
filings to restructure services.
Indiana Gas' pipeline service providers have begun to
seek from customers, including Indiana Gas, recovery
of certain costs related to the transition to
restructured services. Those costs will include
certain gas supply realignment costs and are not
currently expected to exceed $10 million.
In a recent order involving another gas utility in
Indiana, the IURC determined that FERC Order No. 636
transition costs are recoverable as gas costs through
the quarterly GCA process. Given this determination,
Indiana Gas expects that transition costs it is
assessed by its pipeline suppliers will be recovered
through the quarterly GCA process.
11. Income Taxes
Indiana Energy, Inc. and subsidiary companies file a
consolidated federal income tax return. Indiana Gas'
current and deferred tax expense is computed on a
separate company basis. The components of
consolidated income tax expense for Indiana Gas,
including amounts in "Other Income - Net" on the
Consolidated Statements of Income, were as follows:
Thousands 1994 1993 1992
Current:
Federal $13,333 $12,088 $ 9,885
State 2,299 2,018 1,773
15,632 14,106 11,658
Deferred:
Federal 2,987 2,667 1,870
State 286 264 203
3,273 2,931 2,073
Amortization of Investment Tax Credits (930) (1,007) (929)
Consolidated Income Tax Expense $17,975 $16,030 $12,802
Effective income tax rates were 34.22 percent, 35.97
percent and 33.21 percent of pretax income for 1994,
1993 and 1992, respectively. This compares with a
combined federal and state income tax statutory rate
of 37.93 percent for 1994, 37.69 percent for 1993 and
36.97 percent for 1992. Individual components of
these rate differences are not significant except
investment tax credit which amounted to (1.8%),
(2.3%) and (2.4%) in 1994, 1993, and 1992,
respectively.
Deferred income taxes reflect the net tax effect of
temporary differences between the carrying amounts of
assets and liabilities for financial reporting
purposes and the amounts used for income tax
purposes. Deferred income taxes are provided for
taxes not currently payable due to, among other
things, the use of various accelerated depreciation
methods, shorter depreciable lives and the deduction
of certain construction costs for tax purposes. Taxes
deferred in prior years are being charged and income
credited as these tax effects reverse. The provisions
for the deferred tax effects relating to the excess
of tax-over-book depreciation amounted to $2,852,000
in 1994, $2,073,000 in 1993 and $1,504,000 in 1992.
Effective October 1, 1993, Indiana Gas adopted
Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS 109). Indiana Gas
previously used the deferred method of accounting for
income taxes as prescribed by Accounting Principles
Bulletin Opinion No. 11. SFAS 109 requires the use of
the liability method, which effectively results in a
reduction in previously provided deferred income
taxes to reflect the current statutory corporate tax
rate.
Due to the effects of regulation, Indiana Gas is not
permitted to recognize the effect of a tax rate
change as income but is required to reduce tariff
rates to return the "excess" deferred income taxes to
ratepayers over the remaining life of the properties
that give rise to the taxes. Therefore, the
cumulative effect of a change in accounting principle
upon the initial application of SFAS 109 resulted in
no impact on earnings. Under SFAS 109, Indiana Gas
has recorded a net regulatory liability for
approximately $4.8 million on its balance sheet as of
September 30, 1994, related to deferred taxes.
Significant components of Indiana Gas' net deferred
tax liability as of September 30, 1994, are as
follows:
Thousands 1994
Deferred tax liabilities:
Accelerated depreciation $41,652
Property basis differences 18,140
Acquisition adjustment 6,853
Other 2,654
Deferred tax assets:
Deferred investment tax credit (4,943)
Regulatory income tax liability (1,815)
Less deferred income taxes related
to current assets and liabilities (2,654)
Balance at September 30 $59,887
Investment tax credits have been deferred and are
being credited to income over the life of the
property giving rise to the credit. The Tax Reform
Act of 1986 eliminated investment tax credits for
property acquired after January 1, 1986.
12. Summarized Financial Data (Unaudited)
Summarized quarterly financial data (in thousands of
dollars) for 1994 and 1993 are as follows:
<TABLE>
1994: Three Months Ended Dec. 31 Mar. 31 June 30 Sep. 30
<S> <C> <C> <C> <C>
Operating revenues $151,892 $195,672 $ 77,827 $49,906
Operating income (loss) 18,894 24,630 5,551 (1,232)
Earnings (loss) available for common stock $ 15,156 $ 21,740 $ 2,414 $(4,714)
1993: Three Months Ended Dec. 31 Mar. 31 June 30 Sep. 30
Operating revenues $155,537 $178,256 $101,249 $64,236
Operating income (loss) 18,421 21,618 4,541 (307)
Earnings (loss) available for common stock $ 14,017 $ 17,608 $ 761 $(4,137)
Note: Because of the seasonal factors that significantly
affect the companies' operations, the results of
operations for interim periods within fiscal years are not
comparable.
</TABLE>
Item 9. Changes in and Disagreements with Accountants
None.
Part III
Item 10. Directors and Executive Officers of the
Registrant
Except for the list of the executive officers, which
can be found in Part I, Item 4(a) of this report,
the information required to be shown in this part
for Item 10, Directors and Executive Officers of the
Registrant is incorporated by reference here from
the definitive proxy statement of the registrant's
parent company, Indiana Energy, Inc. That statement
was prepared according to Regulations 14A and S-K
and filed electronically with the Securities and
Exchange Commission on December 2, 1994. The
information is included in the report attached as
Exhibit 99.
Item 11. Executive Compensation
The information required to be shown in this part
for Item 11, Executive Compensation, is incorporated
by reference here from the definitive proxy
statement of the registrant's parent company,
Indiana Energy, Inc. That statement was prepared
according to Regulations 14A and S-K and filed
electronically with the Securities and Exchange
Commission on December 2, 1994. The information is
included in the report attached as Exhibit 99.
Contained in the Indiana Energy proxy statement,
Summary Compensation Table, Column C and Column D,
Salary Amounts and Bonus Amounts, are some
compensation dollars which are allocated to
subsidiaries of Indiana Energy other than Indiana
Gas. The named executives received the following
compensation, including Bonus, for the years ended
September 30, 1994, 1993 and 1992, as it relates to
only Indiana Gas.
1994 1993 1992
Lawrence A. Ferger $444,898 $411,455 $397,719
Paul T. Baker 285,360 247,197 231,926
Niel C. Ellerbrook 208,999 194,791 190,871
Anthony E. Ard 159,489 145,238 134,480
Carl L. Chapman 142,736 126,979 116,251
Item 12. Securities Ownership of Certain Beneficial
Owners and Management
The information required to be shown in this part
for Item 12, Securities Ownership of Certain
Beneficial Owners and Management, is incorporated by
reference here from the definitive proxy statement
of the registrant's parent company, Indiana Energy,
Inc. That statement was prepared according to
Regulations 14A and S-K and filed electronically
with the Securities and Exchange Commission on
December 2, 1994. The information is included in
the report attached as Exhibit 99.
Item 13. Certain Relationships and Related Transactions
The information required to be shown in this part
for Item 13, Certain Relationships and Related
Transactions is incorporated by reference here from
the definitive proxy statement of the registrant's
parent company, Indiana Energy, Inc. That statement
was prepared according to Regulations 14A and S-K
and filed electronically with the Securities and
Exchange Commission on December 2, 1994. The
information is included in the report attached as
Exhibit 99.
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
The following documents are filed as part of this
report:
(a)-1 Financial Statements Location in 10-K
Report of Independent Public Accountants Item 8
Consolidated Statements of Income - 1994,
1993 and 1992 Item 8
Consolidated Statements of Cash Flows - 1994,
1993 and 1992 Item 8
Consolidated Balance Sheets at September 30,
1994 and 1993 Item 8
Consolidated Statements of Common Shareholder's
Equity - 1994, 1993 and 1992 Item 8
Consolidated Schedules of Long-Term Debt
as of September 30, 1994 and 1993 Item 8
Notes to Financial Statements Item 8
(a)-2 Financial Statement Schedules
Report of Independent Public Accountants on
Schedules
Schedule V. Property, Plant and Equipment -
1994, 1993 and 1992
Schedule VI. Accumulated Depreciation, Depletion
and Amortization of Property, Plant
and Equipment - 1994, 1993, 1992
Schedule VIII.Valuation and Qualifying Accounts -
1994, 1993 and 1992
Schedule X. Supplementary Income Statement
Information - 1994, 1993 and 1992
Other schedules are omitted as not applicable or the
required information is shown in the consolidated financial
statements or notes to consolidated financial statements.
(a)-3 Exhibits
See Exhibit Index
(b) Reports on Form 8-K
None filed during the fourth quarter of fiscal 1994.
EXHIBIT INDEX
Exhibit No. Description Reference
2-A Acquisition Agreement Exhibit 10-N of
dated October 26, Indiana Gas Company,
1990, between Indiana Inc.'s 1990 Annual
Gas and Indiana Report on Form 10-K.
Energy, Inc.
3-A Amended and Restated Exhibit 3-A to
Articles of Indiana Gas Company,
Incorporation. Inc.'s 1993 Annual
Report on Form 10-K.
3-B Code of By-Laws, as Filed herewith.
amended.
4-A Indenture dated as of Indiana Gas Company,
September 1, 1950, Inc.'s Registration
between Indiana Gas No. 2-77620 (pages 6-
and Merchants 8 of the Prospectus
National Bank & Trust on Form S-16
Company of contained therein),
Indianapolis (now to Registration No. 2-
National City Bank, 40825 (Exhibit Nos. 2-
Indiana), as trustee A through 2-H), to
("Trustee"), and Registration No. 2-
twelve supplemental 52734 (Exhibit No. 2-
indentures thereto. C), to Registration
No. 2-68469 (Exhibit
No. 2-J), to
Registration No. 2-
77620 (Exhibit No. 4-
0), to Registration
No. 33-1262 (Exhibit
No. 4K), to the 1985
Annual Report on Form
10-K (Exhibit 4) and
to the 1986 Annual
Report on Form 10-K
(Exhibit No. 4-D).
4-B Indenture dated Exhibit 4(a) to
February 1, 1991, Indiana Gas Company,
between Indiana Gas Inc.'s Current Report
and Continental Bank, on Form 8-K dated
National Association. February 1, 1991, and
filed February 15,
1991; First
Supplemental
Indenture thereto
dated as of February
15, 1991,
(incorporated by
reference to Exhibit
4(b) to Indiana Gas
Company, Inc.'s
Current Report on
Form 8-K dated
February 1, 1991, and
filed February 15,
1991); Second
Supplemental
Indenture thereto
dated as of September
15, 1991,
(incorporated by
reference to Exhibit
4(b) to Indiana Gas
Company, Inc.'s
Current Report on
Form 8-K dated
September 15, 1991,
and filed September
25, 1991); Third
Supplemental
Indenture thereto
dated as of September
15, 1991
(incorporated by
reference to Exhibit
4(c) to Indiana Gas
Company, Inc.'s
Current Report on
Form 8-K dated
September 15, 1991
and filed September
25, 1991); and Fourth
Supplemental
Indenture thereto
dated as of December
2, 1992,
(incorporated by
reference to Exhibit
4(b) to Indiana Gas
Company, Inc.'s
Current Report on
Form 8-K dated
December 1, 1992, and
filed December 8,
1992).
10-A Employment Agreement Exhibit 10-A to
among Indiana Energy, Indiana Energy's 1990
Inc., Indiana Gas Annual Report on Form
Company, Inc., and 10-K.
Lawrence A. Ferger
effective January 1,
1990.
10-B Employment Agreement Exhibit 10-C to
among Indiana Energy, Indiana Energy's 1990
Inc., Indiana Gas Annual Report on Form
Company, Inc., and 10-K.
Niel C. Ellerbrook,
effective
January 1, 1990.
10-C Employment Agreement Exhibit 10-D to
between Indiana Gas Indiana Energy's 1990
Company, Inc., and Annual Report on Form
Paul T. Baker 10-K.
effective January 1,
1990.
10-D Employment Agreement Exhibit 10-E to
between Indiana Gas Indiana Energy's 1990
Company, Inc., and Annual Report on Form
Anthony E. Ard 10-K.
effective January 1,
1990.
10-E Employment Agreement Exhibit 10-F to
among Indiana Energy, Indiana Energy's 1990
Inc., Indiana Gas Annual Report on Form
Company, Inc., and 10-K.
Carl L. Chapman
effective
January 1, 1990.
10-F Termination Benefits Exhibit 10-F to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and Lawrence A.
Ferger.
10-G Termination Benefits Exhibit 10-G to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and
Paul T. Baker.
10-H Termination Benefits Exhibit 10-H to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and Niel C.
Ellerbrook.
10-I Termination Benefits Exhibit 10-I to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and
Anthony E. Ard.
10-J Termination Benefits Exhibit 10-J to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and
Carl L. Chapman.
10-K Executive Exhibit 10-K to
Compensation Deferral Indiana Energy,
Plan effective Inc.'s 1994 Annual
December 1, 1994. Report on Form 10-K.
10-L Directors Exhibit 10-L to
Compensation Deferral Indiana Energy,
Plan effective Inc.'s 1994 Annual
February 1, 1981. Report on Form 10-K.
10-M Directors Exhibit 10-M to
Compensation Deferral Indiana Energy,
Plan effective Inc.'s 1994 Annual
January 1, 1995. Report on Form 10-K.
10-N Executive Restricted Exhibit A to Indiana
Stock Plan effective Energy's Proxy
October 1, 1987, as Statement filed on
amended. December 4, 1987;
First Amendment to
Indiana Energy, Inc.
Executive Restricted
Stock Plan
(incorporated by
reference to Exhibit
10-A to Indiana
Energy's 1991 Annual
Report on Form 10-K).
10-O Indiana Energy, Inc. Exhibit 10-D to
Annual Management Indiana Energy's 1987
Incentive Plan Annual Report on Form
effective October 1, 10-K.
1987.
10-P Indiana Energy, Inc. Indiana Energy's
Directors' Restricted Definitive Proxy
Stock Plan, as Statement filed on
amended and restated December 6, 1991.
on October 25, 1991.
10-Q Exhibit 10-Q schedules all material
gas contracts which are in effect
between Indiana Gas Company, Inc.
and the suppliers listed. The gas
contracts within each type are
substantially identical in all
material respects and at least one
of each type of contract has been or
is filed as indicated. The schedule
details all material aspects in
which a contract may differ from the
contract filed.
<TABLE>
Exh Days of Effective Expir.
No. Type of Contract Supplier Contract No. Wthdrwl. MDth/Day Date Date Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/93 Form 10-
Q, File 1-6494:
10-Q.1 Firm Transportation Panhandle Eastern P PLT 011715 38,572 5/1/93 3/31/98 Exh. 10-B
10-Q.2 Firm Transportation Panhandle Eastern P PLT 011716 51,431 5/1/93 3/31/99 Exh. 10-A
10-Q.3 Firm Transportation Panhandle Eastern P PLT 011718 51,431 5/1/93 2/28/97 Exh. 10-C
10-Q.4 Firm Transportation Panhandle Eastern P PLT 011721 77,144 5/1/93 3/31/97 Exh. 10-D
10-Q.5 Market Area - Panhandle Eastern P PLT 011719 50,000 5/1/93 3/31/97 1993 Form 10-K
Firm Transportation Exhibit 10-I.5,
File 1-6494.
10-Q.6 Market Area - Panhandle Eastern P PLT 011720 50,000 5/1/93 3/31/97 See Exhibit 10-Q.5.
Firm Transportation
10-Q.7 Market Area - Texas Gas T3780 50,000 11/1/93 10/31/98 1993 Form 10-K
Firm Transportation Exhibit 10-I.7,
File 1-6494.
10-Q.8 No Notice Service Texas Gas N0420 41,687 11/1/93 10/31/98 1993 Form 10-K,
Exhibit 10-I.8,
File 1-6494.
10-Q.9 No Notice Service Texas Gas N0325 56,793 11/1/93 10/31/97 See Exhibit 10-Q.8
10-Q.10 No Notice Service Texas Gas N0325 56,794 11/1/93 10/31/98 See Exhibit 10-Q.8
10-Q.11 No Notice Service Texas Gas N0325 56,794 11/1/93 10/31/99 See Exhibit 10-Q.8
6/30/93 Form 10-
Q, File 1-6494:
10-Q.12 Firm Storage Panhandle Eastern P PLS 011713 100 50,312 5/1/93 3/31/96 Exh. 10-G
10-Q.13 Firm Storage Panhandle Eastern P PLS 012044 100 25,000 5/1/93 3/31/96 Exh. 10-E
10-Q.14 Firm Storage ANR T,E & S 00087 100 29,000 3/1/73 2/28/96 1991 Form 10-K,
Exh. 10-N, File
1-6494.
10-Q.15 Firm Storage ANR T,E & S 05787 100 100,806 4/1/92 3/31/97 1992 Form 10-K,
Exh. 10-R, File
1-6494.
6/30/93 Form
10-Q, File
1-6494:
10-Q.16 Firm Storage-Related Panhandle Eastern P PLT 011714 49,515 5/1/93 3/31/96 Exh. 10-H
Transportation
10-Q.17 Firm Storage-Related Panhandle Eastern P PLT 012045 24,604 5/1/93 3/31/96 Exh. 10-F
Transportation
10-Q.18 Firm Storage-Related ANR T,E & S 05788 100,000 4/1/92 3/31/97 1992 Form 10-K,
Transportation Exh. 10-S, File
1-6494.
10-Q.19 Firm Natural Gas Anadarko NGFSA 507 50,000 10/1/94 9/30/95 Filed herewith.
Supply
</TABLE>
23 Consent of Independent Public
Accountants Filed herewith.
27 Financial Data Schedule Filed herewith.
99 Indiana Energy, Inc.'s (parent
company) Definitive Proxy
Statement for Annual Meeting
of Shareholders to be held on
January 9, 1995. Filed herewith.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To Indiana Gas Company, Inc.:
We have audited in accordance with generally accepted
auditing standards, the consolidated financial statements
included in Item 8, in this Form 10-K, and have issued our
report thereon dated October 28, 1994. Our audit was made
for the purpose of forming an opinion on those statements
taken as a whole. The schedules listed in Item 14(a)-2 are
the responsibility of the company's management and are
presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected
to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set
forth therein in relation to the basic financial statements
taken as a whole.
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Indianapolis, Indiana
October 28, 1994
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1994
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Balance at Other Balance at
September 30, Additions Changes September 30,
Classification 1993 At Cost Retirements (Note 1) 1994
<S> <C> <C> <C> <C> <C>
ORIGINAL COST:
Gas Plant in Service -
Production $ 8,144 $ 84 $ 0 $ 0 $ 8,228
Storage - Underground 29,161 9,244 585 0 37,820
Distribution 560,445 36,138 4,037 0 592,546
General 73,644 5,283 1,987 4 76,944
Total Gas Plant in Service 671,394 50,749 6,609 4 715,538
Gas in Underground Storage -
Noncurrent 11,520 737 0 0 12,257
Completed Construction Not Classified 22,042 26,463 0 0 48,505
Construction Work In Progress 29,250 (22,074) 0 0 7,176
Retirements (Estimated) (2,013) 0 (271) 0 (1,742)
Property Held Under Capital Lease 4,026 0 0 0 4,026
Property Leased to Others 772 8 0 0 780
Property Held for Future Use 444 0 0 0 444
Intangibles 8,570 1,702 0 (4) 10,268
Total Original Cost $ 746,005 $ 57,585 $ 6,338 $ 0 $ 797,252
ACQUISITION ADJUSTMENTS $ 27,169 $ 1,053 $ 635 $ 0 $ 27,587
NONUTILITY PROPERTY $ 518 $ 0 $ 93 $ 0 $ 425
Note:
(1) Represents the reclassification of certain property within "Original Cost" categories.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1993
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Balance at Other Balance at
September 30, Additions Changes September 30,
Classification 1992 At Cost Retirements (Note 1) 1993
<S> <C> <C> <C> <C> <C>
ORIGINAL COST:
Gas Plant in Service -
Production $ 7,843 $ 2,238 $ 63 $ (1,874) $ 8,144
Storage - Underground 28,477 711 27 0 29,161
Distribution 522,051 44,213 5,744 (75) 560,445
General 70,777 6,771 3,979 75 73,644
Total Gas Plant in Service 629,148 53,933 9,813 (1,874) 671,394
Gas in Underground Storage -
Noncurrent 11,520 0 0 0 11,520
Completed Construction Not Classified 30,759 (8,717) 0 0 22,042
Construction Work In Progress 17,640 11,610 0 0 29,250
Retirements (Estimated) (2,986) 0 (973) 0 (2,013)
Property Held Under Capital Lease 4,026 0 0 0 4,026
Property Leased to Others 598 174 0 0 772
Property Held for Future Use 444 0 0 0 444
Intangibles 6,577 119 0 1,874 8,570
Total Original Cost $ 697,726 $ 57,119 $ 8,840 $ 0 $ 746,005
ACQUISITION ADJUSTMENTS $ 27,586 $ (417) $ 0 $ 0 $ 27,169
NONUTILITY PROPERTY $ 518 $ 0 $ 0 $ 0 $ 518
Note:
(1) Represents the reclassification of certain property within "Original Cost" categories.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1992
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Balance at Other Balance at
September 30, Additions Changes September 30,
Classification 1991 At Cost Retirements (Note 1) 1992
<S> <C> <C> <C> <C> <C>
ORIGINAL COST:
Gas Plant in Service -
Production $ 5,968 $ 1,879 $ 4 $ 0 $ 7,843
Storage - Underground 27,185 1,301 17 8 28,477
Distribution 485,958 39,692 3,592 (7) 522,051
General 64,322 11,076 4,620 (1) 70,777
Total Gas Plant in Service 583,433 53,948 8,233 0 629,148
Gas in Underground Storage -
Noncurrent 7,296 4,224 0 0 11,520
Completed Construction Not Classified 26,830 3,929 0 0 30,759
Construction Work In Progress 22,998 (5,358) 0 0 17,640
Retirements (Estimated) (5,031) 0 (2,045) 0 (2,986)
Property Held Under Capital Lease 3,324 702 0 0 4,026
Property Leased to Others 0 598 0 0 598
Property Held for Future Use 444 0 0 0 444
Intangibles 36 6,541 0 0 6,577
Total Original Cost $ 639,330 $ 64,584 $ 6,188 $ 0 $ 697,726
ACQUISITION ADJUSTMENTS $ 27,922 $ (336) $ 0 $ 0 $ 27,586
NONUTILITY PROPERTY $ 518 $ 0 $ 0 $ 0 $ 518
Note:
(1) Represents the reclassification of certain property within the "Gas Plant in Service" categories.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1994
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Additions Deductions
(1) (2) (1) (2)
Charged Property Salvage
Balance at Charged to to Other Retired at Less Balance at
September 30, Costs and Accounts Original Removal Other September 30,
Description 1993 Expenses (Note A) Cost Cost Charges 1994
<S> <C> <C> <C> <C> <C> <C> <C>
Gas Plant in Service -
Production $ 4,183 $ 363 $ 0 $ 0 $ 0 $ 0 $ 4,546
Storage - Underground 16,068 1,253 0 6 2 0 17,313
Distribution 221,221 22,729 0 4,037 1,053 0 238,860
General 20,061 3,020 1,151 2,565 (852) 0 22,519
Total Gas Plant in Service 261,533 27,365 1,151 6,608 203 0 283,238
Retirement Work in Progress (855) 0 0 0 (77) 0 (778)
Retirements (Estimated) (2,013) 0 0 (270) 0 0 (1,743)
Property Held Under Capital Lease 1,576 564 0 0 0 0 2,140
Property Leased to Others 138 116 0 0 0 0 254
Property Held for Future Use 83 0 0 0 0 0 83
Intangibles 1,044 753 0 0 0 0 1,797
Total Accumulated Depreciation $ 261,506 $ 28,798 $ 1,151 $ 6,338 $ 126 $ 0 $ 284,991
Acquisition Adjustments $ 6,123 $ 709 $ 0 $ 0 $ 0 $ 0 $ 6,832
Nonutility Property $ 284 $ 9 $ 0 $ 93 $ 168 $ 0 $ 32
Notes:
(A) Represents provision charged to transportation clearing account.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1993
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Additions Deductions
(1) (2) (1) (2)
Charged Property Salvage
Balance at Charged to to Other Retired at Less Other Balance at
September 30, Costs and Accounts Original Removal Charges September 30,
Description 1992 Expenses (Note A) Cost Cost (Note B) 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Gas Plant in Service -
Production $ 3,966 $ 290 $ 0 $ 64 $ 9 $ 0 $ 4,183
Storage - Underground 15,114 989 0 27 8 0 16,068
Distribution 207,251 21,093 1 5,743 1,381 0 221,221
General 19,186 2,969 1,058 3,979 (1,447) (620) 20,061
Total Gas Plant in Service 245,517 25,341 1,059 9,813 (49) (620) 261,533
Retirement Work in Progress (372) 0 0 0 483 0 (855)
Retirements (Estimated) (2,986) 0 0 (973) 0 0 (2,013)
Property Held Under Capital Lease 1,012 564 0 0 0 0 1,576
Property Leased to Others 52 86 0 0 0 0 138
Property Held for Future Use 83 0 0 0 0 0 83
Intangibles 0 424 0 0 0 620 1,044
Total Accumulated Depreciation $ 243,306 $ 26,415 $ 1,059 $ 8,840 $ 434 $ 0 $ 261,506
Acquisition Adjustments $ 5,371 $ 752 $ 0 $ 0 $ 0 $ 0 $ 6,123
Nonutility Property $ 273 $ 11 $ 0 $ 0 $ 0 $ 0 $ 284
Notes:
(A) Represents provision charged to transportation clearing account.
(B) Represents the reclassification of certain property within "Accumulated Depreciation" categories.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1992
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Additions Deductions
(1) (2) (1) (2)
Charged Property Salvage
Balance at Charged to to Other Retired at Less Balance at
September 30, Costs and Accounts Original Removal Other September 30,
Description 1991 Expenses (Note A) Cost Cost Charges 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Gas Plant in Service -
Production $ 3,727 $ 243 $ 0 $ 4 $ 0 $ 0 $ 3,966
Storage - Underground 14,157 976 0 17 2 0 15,114
Distribution 189,296 19,761 2 3,592 (1,784) 0 207,251
General 18,909 3,103 980 4,620 (814) 0 19,186
Total Gas Plant in Service 226,089 24,083 982 8,233 (2,596) 0 245,517
Retirement Work in Progress (172) 0 0 0 200 0 (372)
Retirements (Estimated) (5,031) 0 0 (2,045) 0 0 (2,986)
Property Held Under Capital Lease 499 513 0 0 0 0 1,012
Property Leased to Others 0 52 0 0 0 0 52
Property Held for Future Use 83 0 0 0 0 0 83
Total Accumulated Depreciation $ 221,468 $ 24,648 $ 982 $ 6,188 $ (2,396) $ 0 $ 243,306
Acquisition Adjustments $ 4,614 $ 757 $ 0 $ 0 $ 0 $ 0 $ 5,371
Nonutility Property $ 259 $ 14 $ 0 $ 0 $ 0 $ 0 $ 273
Note:
(A) Represents provision charged to transportation clearing account.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED SEPTEMBER 30, 1994
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Additions Deductions
(1) (2)
For Purposes
Balance at Charged to For Which Other Balance at
September 30, Costs and Reserves Changes September 30,
Description 1993 Expenses Other Were Created (Note A) 1994
<S> <C> <C> <C> <C> <C> <C>
RESERVE DEDUCTED FROM APPLICABLE ASSETS:
Reserve for uncollectible accounts $ 2,055 $ 3,850 $ 0 $ 4,667 $ 0 $ 1,238
RESERVE SEPARATELY CLASSIFIED:
Deferred income taxes $ 56,911 $ 3,273 $ 0 $ 0 $ (297) $ 59,887
Note:
(A) Represents the implementation of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes effective
October 1, 1993.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED SEPTEMBER 30, 1993
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Additions Deductions
(1) (2)
For Purposes
Balance at Charged to For Which Balance at
September 30, Costs and Reserves Other September 30,
Description 1992 Expenses Other Were Created Changes 1993
<S> <C> <C> <C> <C> <C> <C>
RESERVE DEDUCTED FROM APPLICABLE ASSETS:
Reserve for uncollectible accounts $ 2,299 $ 2,950 $ 0 $ 3,194 $ 0 $ 2,055
RESERVE SEPARATELY CLASSIFIED:
Deferred income taxes $ 53,980 $ 2,931 $ 0 $ 0 $ 0 $ 56,911
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED SEPTEMBER 30, 1992
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Additions Deductions
(1) (2)
For Purposes
Balance at Charged to For Which Balance at
September 30, Costs and Reserves Other September 30,
Description 1991 Expenses Other Were Created Changes 1992
<S> <C> <C> <C> <C> <C> <C>
RESERVE DEDUCTED FROM APPLICABLE ASSETS:
Reserve for uncollectible accounts $ 2,226 $ 2,699 $ 0 $ 2,626 $ 0 $ 2,299
RESERVE SEPARATELY CLASSIFIED:
Deferred income taxes $ 51,907 $ 2,073 $ 0 $ 0 $ 0 $ 53,980
</TABLE>
SCHEDULE X
Supplemental Income Statement Information
Years Ended September 30, 1994, 1993 and 1992
In addition to the amounts included in other operation
and maintenance and the depreciation amounts shown in the
consolidated statements of income in Item 8 of this
report Form 10-K, certain maintenance and depreciation is
charged to various clearing accounts. The amounts so
charged were not significant.
During the years presented, there were no royalties or
advertising costs of significant amount.
Maintenance amounts included in the caption "Other
operation and maintenance" and gross income taxes shown
under the caption "Taxes other than income taxes" in the
consolidated statements of income are set forth below.
Other taxes charged to income, other than payroll and
income taxes, were not significant.
Years Ended September 30
Thousands 1994 1993 1992
Maintenance $ 9,501 $14,197 $10,205
Indiana gross income taxes $ 6,267 $ 5,760 $ 4,947
EXHIBIT 21
State of Incorporation
Subsidiaries of Indiana Gas Company, Inc. (Parent) -
Richmond Gas Corporation Indiana
Terre Haute Gas Corporation Indiana
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent
to the incorporation of our reports included in this Form
10-K into Indiana Gas Company, Inc.'s previously filed
Registration Statement File No. 33-54820.
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Indianapolis, Indiana
December 22, 1994
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INDIANA GAS COMPANY,
INC.
Dated December 22, 1994 /s/Lawrence A. Ferger
Lawrence A. Ferger, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities
and on the dates indicated.
Signature Title Date
/s/Lawrence A. Ferger President, Chief Executive December 22, 1994
Lawrence A. Ferger Officer and Director
/s/Niel C. Ellerbrook Senior Vice President December 22, 1994
Niel C. Ellerbrook Chief Financial Officer
and Director
/s/Jerome A. Benkert Controller December 22, 1994
Jerome A. Benkert
/s/Duane M. Amundson Chairman of the Board of December 22, 1994
Duane M. Amundson Directors
/s/Paul T. Baker Senior Vice President December 22, 1994
Paul T. Baker Chief Operating Officer and
Director
/s/Gerald L. Bepko Director December 22, 1994
Gerald L. Bepko
/s/Howard J. Cofield Director December 22, 1994
Howard J. Cofield
/s/Loren K. Evans Director December 22, 1994
Loren K. Evans
/s/Otto N. Frenzel III Director December 22, 1994
Otto N. Frenzel III
/s/Anton H. George Director December 22, 1994
Anton H. George
/s/Don E. Marsh Director December 22, 1994
Don E. Marsh
/s/Richard P. Rechter Director December 22, 1994
Richard P. Rechter
/s/James C. Shook Director December 22, 1994
James C. Shook
EXHIBIT 3-B
CODE OF BY-LAWS
OF
INDIANA GAS COMPANY, INC.
AS AMENDED AND RESTATED
IN FULL ON JULY 1, 1987
AS FURTHER AMENDED OCTOBER 27, 1989
AS FURTHER AMENDED AUGUST 31, 1990
AS FURTHER AMENDED JULY 26, 1991
AS FURTHER AMENDED SEPTEMBER 24, 1993
AS FURTHER AMENDED FEBRUARY 25, 1994
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office
(the "Principal Office") of INDIANA GAS COMPANY, INC. (the
"Corporation") shall be at the registered office of the
Corporation, or such other place as shall be determined by
resolution of the Board of Directors of the Corporation
(the "Board").
SECTION 2. OTHER OFFICES. The Corporation may have
such other offices at such other places within or without
the State of Indiana as the Board may from time to time
designate, or as the business of the Corporation may
require.
ARTICLE II
SEAL
SECTION 1. CORPORATE SEAL. The corporate seal of
the Corporation (the "Seal") shall be circular in form and
shall have inscribed thereon the words "INDIANA GAS
COMPANY, INC. -- CORPORATE SEAL -- INDIANA." Use of the
Seal or an impression thereof shall not be required, and
shall not affect the validity of any instrument
whatsoever.
ARTICLE III
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETING. Every meeting of the
shareholders of the Corporation (the "Shareholders") shall
be held at the Principal Office, unless a different place
is specified in the notice or waiver of notice of such
meeting or by resolution of the Board or the Shareholders,
in which event such meeting may be held at the place so
specified, either within or without the State of Indiana.
SECTION 2. ANNUAL MEETING. The annual meeting of
the Shareholders (the "Annual Meeting") shall be held each
year at 9:00 o'clock A.M. on the second Monday in January,
or such other time or date determined by resolution of the
board, for the purpose of electing directors of the
Corporation ("Directors") and for the transaction of such
other business as may legally come before the Annual
Meeting. If for any reason the Annual Meeting shall not
be held at the date and time specified or fixed as herein
provided, the business to be transacted at such Annual
Meeting may be transacted at any special meeting of the
Shareholders (a "Special Meeting") called for that
purpose.
SECTION 3. NOTICE OF ANNUAL MEETING. Written or
printed notice of the Annual Meeting, stating the date,
time and place thereof, shall be delivered or mailed by
the Secretary or an Assistant Secretary to each
Shareholder of record entitled to notice of such Meeting,
at such address as appears on the records of the
Corporation, at least ten and not more than sixty days
before the date of such Meeting.
SECTION 4. SPECIAL MEETINGS. Special Meetings, for
any purpose or purposes (unless otherwise prescribed by
law), may be called by the Board or the President, and
shall be called by the President or any Vice President at
(a) the request in writing of a majority of the Board, or
(b) at the written demand, delivered to the Secretary, of
Shareholders holding of record not less than one-fourth of
the voting power of all the shares of the Corporation
("Shares") issued and outstanding and entitled by the
Amended and Restated Articles of Incorporation of the
Corporation, as the same may, from time to time, be
amended (the "Articles"), to vote on the business proposed
to be transacted thereat. All requests or demands for
Special Meetings shall state the purpose or purposes
thereof, and the business transacted at such Meeting shall
be confined to the purposes stated in the call and matters
germane thereto.
SECTION 5. NOTICE OF SPECIAL MEETINGS. Written or
printed notice of all Special Meetings, stating the date,
time, place and purpose or purposes thereof, shall be
delivered or mailed by the Secretary or the President or
the Vice President calling the Meeting to each Shareholder
of record entitled to notice of such Meeting, at such
address as appears on the records of the Corporation, at
least ten and not more than sixty days before the date of
such Meeting. Notice of any Special Meeting called at the
written demand of Shareholders shall be delivered or
mailed within sixty days of the Secretary's receipt of
such demand.
SECTION 6. WAIVER OF NOTICE OF MEETINGS. Notice of
any Annual or Special Meeting (a "Meeting") may be waived
in writing by any Shareholder, before or after the date
and time of the Meeting specified in the notice thereof,
by a written waiver delivered to the Corporation for
inclusion in the minutes or filing with the corporate
records. A Shareholder's attendance at any Meeting in
person or by proxy shall constitute a waiver of (a) notice
of such Meeting, unless the Shareholder at the beginning
of the Meeting objects to the holding of or the
transaction of business at the Meeting, and (b)
consideration at such Meeting of any business that is not
within the purpose or purposes described in the Meeting
notice, unless the Shareholder objects to considering the
matter when it is presented.
SECTION 7. QUORUM. At any Meeting, the holders of a
majority of the voting power of Shares issued and
outstanding and entitled to vote at such Meeting,
represented in person or by proxy, shall constitute a
quorum for the election of Directors or for the
transaction of other business, unless otherwise provided
by law, the Articles or this Code of By-Laws, as the same
may, from time to time, be amended (these "By-Laws"). If,
however, a quorum shall not be present or represented at
any Meeting, the Shareholders entitled to vote thereat,
present in person or represented by proxy, shall have
power to adjourn the Meeting from time to time, without
notice other than announcement at the Meeting of the date,
time and place of the adjourned Meeting, unless the date
of the adjourned Meeting requires that the Board fix a new
record date (the "Record Date") therefor, in which case
notice of the adjourned Meeting shall be given. At such
adjourned Meeting, if a quorum shall be present or
represented, any business may be transacted that might
have been transacted at the Meeting as originally
scheduled.
SECTION 8. VOTING. At each Meeting, every
Shareholder entitled to vote shall have one vote for each
Share standing in his name on the books of the Corporation
as of the Record Date fixed by the Board for such Meeting,
except as otherwise provided by law or the Articles, and
except that no Share shall be voted at any Meeting upon
which any installment is due and unpaid. Voting for
Directors and, upon the demand of any Shareholder, voting
upon any question properly before a Meeting, shall be by
ballot. A plurality vote shall be necessary to elect any
Director, and on all other matters, the action or a
question shall be approved if the number of votes cast
thereon in favor of the action or question exceeds the
number of votes cast opposing the action or question,
except as otherwise provided by law or the Articles.
SECTION 9. SHAREHOLDER LIST. The Secretary shall
prepare before each Meeting a complete list of the
Shareholders entitled to notice of such Meeting, arranged
in alphabetical order by class of Shares (and each series
within a class), and showing the address of, and the
number of Shares entitled to vote held by, each
Shareholder (the "Shareholder List"). Beginning five
business days before the Meeting and continuing throughout
the Meeting, the Shareholder List shall be on file at the
Principal Office or at a place identified in the Meeting
notice in the city where the Meeting will be held, and
shall be available for inspection by any Shareholder
entitled to vote at the Meeting. On written demand, made
in good faith and for a proper purpose and describing with
reasonable particularity the Shareholder's purpose, and if
the Shareholder List is directly connected with the
Shareholder's purpose, a Shareholder (or such
Shareholder's agent or attorney authorized in writing)
shall be entitled to inspect and to copy the Shareholder
List, during regular business hours and at the
Shareholder's expense, during the period the Shareholder
List is available for inspection. The original stock
register or transfer book (the "Stock Book"), or a
duplicate thereof kept in the State of Indiana, shall be
the only evidence as to who are the Shareholders entitled
to examine the Shareholder List, or to notice of or to
vote at any Meeting.
SECTION 10. PROXIES. A Shareholder may vote either
in person or by proxy executed in writing by the
Shareholder or a duly authorized attorney-in-fact. No
proxy shall be valid after eleven months from the date of
its execution, unless a longer time is expressly provided
therein.
SECTION 11. NOTICE OF SHAREHOLDER BUSINESS. At any
meeting of the shareholders, only such business may be
conducted as shall have been properly brought before the
meeting, and as shall have been determined to be lawful
and appropriate for consideration by shareholders at the
meeting. To be properly brought before a meeting,
business must be (a) specified in the notice of meeting
given in accordance with Section 3 or 5 of this Article
III, (b) otherwise properly brought before the meeting by
or at the direction of the board of directors or the chief
executive officer, or (c) otherwise properly brought
before the meeting by a shareholder. For business to be
properly brought before a meeting by a shareholder
pursuant to clause (c) above, the shareholder must have
given timely notice thereof in writing to the secretary of
the Company. To be timely, a shareholder's notice must be
delivered to, or mailed and received at, the principal
office of the Company, not less than fifty days nor more
than ninety days prior to the meeting; provided, however,
that in the event that less than sixty days' notice of the
date of the meeting is given to shareholders, notice by
the shareholder to be timely must be so received not later
than the close of business on the tenth day following the
day on which such notice of the date of the meeting was
given. A shareholder's notice to the secretary shall set
forth as to each matter the shareholder proposes to bring
before the meeting (a) a brief description of the business
desired to be brought before the meeting, (b) the name and
address, as they appear on the Company's stock records, of
the shareholder proposing such business, (c) the class and
number of shares of the Company which are beneficially
owned by the shareholder, and (d) any interest of the
shareholder in such business. Notwithstanding anything in
these by-laws to the contrary, no business shall be
conducted at a meeting except in accordance with the
procedures set forth in this Section 11. The person
presiding at the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the
by-laws, or that business was not lawful or appropriate
for consideration by shareholders at the meeting, and if
he should so determine, he shall so declare to the meeting
and any such business shall not be transacted.
SECTION 12. NOTICE OF SHAREHOLDER NOMINEES.
Nominations of persons for election to the board of
directors of the Company may be made at any meeting of
shareholders by or at the direction of the board of
directors or by any shareholder of the Company entitled to
vote for the election of directors at the meeting.
Shareholder nominations shall be made pursuant to timely
notice given in writing to the secretary of the Company in
accordance with Section 11 of this Article III. Such
shareholder's notice shall set forth, in addition to the
information required by Section 11, as to each person whom
the shareholder proposes to nominate for election or re-
election as a director, (i) the name, age, business
address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii)
the class and number of shares of the Company which are
beneficially owned by such person, (iv) any other
information relating to such person that is required to be
disclosed in solicitation of proxies for election of
directors, or is otherwise required, in each case pursuant
to Regulation 14A under the Securities Exchange Act of
1934, as amended (including, without limitation, such
person's written consent to being named in the proxy
statement as a nominee and to serving as a director, if
elected), and (v) the qualifications of the nominee to
serve as a director of the Company. No shareholder
nomination shall be effective unless made in accordance
with the procedures set forth in this Section 12. The
person presiding at the meeting shall, if the facts
warrant, determine and declare to the meeting that a
shareholder nomination was not made in accordance with the
by-laws, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall
be disregarded.
ARTICLE IV
BOARD OF DIRECTORS
SECTION 1. NUMBER. The business and affairs of the
Corporation shall be managed by a Board of twelve (12)
Directors, divided into three classes as provided in the
Articles. The Board may elect or appoint, from among its
members, a Chairman of the Board (the "Chairman"), who
need not be an Officer or employee of the Corporation.
The Chairman shall preside at all Shareholders Meetings
and Board Meetings and shall have such other powers and
perform such other duties as are incident to such position
and as may be assigned by the Board.
SECTION 2. VACANCIES AND REMOVAL. Any vacancy
occurring in the Board shall be filled as provided in the
Articles. Shareholders shall be notified of any increase
in the number of Directors and the name, principal
occupation and other pertinent information about any
Director elected by the Board to fill any vacancy. Any
Director, or the entire Board, may be removed from office
only as provided in the Articles.
SECTION 3. POWERS AND DUTIES. In addition to the
powers and duties expressly conferred upon it by law, the
Articles or these By-Laws, the Board may exercise all such
powers of the Corporation and do all such lawful acts and
things as are not inconsistent with the law, the Articles
or these By-Laws.
SECTION 4. ANNUAL BOARD MEETING. Unless otherwise
determined by the Board, the Board shall meet each year
immediately after the Annual Meeting, at the place where
such Meeting has been held, for the purpose of
organization, election of Officers of the Corporation (the
"Officers") and consideration of any other business that
may properly be brought before such annual meeting of the
Board (the "Annual Board Meeting"). No notice shall be
necessary for the holding of the Annual Board Meeting. If
the Annual Board Meeting is not held as above provided,
the election of Officers may be held at any subsequent
duly constituted meeting of the Board (a "Board Meeting").
SECTION 5. REGULAR BOARD MEETINGS. Regular meetings
of the Board ("Regular Board Meetings") may be held at
stated times or from time to time, and at such place,
either within or without the State of Indiana, as the
Board may determine, without call and without notice.
SECTION 6. SPECIAL BOARD MEETINGS. Special meetings
of the Board ("Special Board Meetings") may be called at
any time or from time to time, and shall be called on the
written request of at least two Directors, by the Chairman
or the President, by causing the Secretary or any
Assistant Secretary to give to each Director, either
personally or by mail, telephone, telegraph, teletype or
other form of wire or wireless communication at least two
days' notice of the date, time and place of such Meeting.
Special Board Meetings shall be held at the Principal
Office or at such other place, within or without the State
of Indiana, as shall be specified in the respective
notices or waivers of notice thereof.
SECTION 7. WAIVER OF NOTICE AND ASSENT. A Director
may waive notice of any Board Meeting before or after the
date and time of the Board Meeting stated in the notice by
a written waiver signed by the Director and filed with the
minutes or corporate records. A Director's attendance at
or participation in a Board Meeting shall constitute a
waiver of notice of such Meeting and assent to any
corporate action taken at such Meeting, unless (a) the
Director at the beginning of such Meeting (or promptly
upon his arrival) objects to holding of or transacting
business at the Meeting and does not thereafter vote for
or assent to action taken at the Meeting; (b) the
Director's dissent or abstention from the action taken is
entered in the minutes of such Meeting; or (c) the
Director delivers written notice of his dissent or
abstention to the presiding Director at such Meeting
before its adjournment, or to the Secretary immediately
after its adjournment. The right of dissent or abstention
is not available to a Director who votes in favor of the
action taken.
SECTION 8. QUORUM. At all Board Meetings, a
majority of the number of Directors designated for the
full Board (the "Full Board") shall be necessary to
constitute a quorum for the transaction of any business,
except (a) that for the purpose of filling of vacancies a
majority of Directors then in office shall constitute a
quorum, and (b) that a lesser number may adjourn the
Meeting from time to time until a quorum is present. The
act of a majority of the Board present at a Meeting at
which a quorum is present shall be the act of the Board,
unless the act of a greater number is required by law, the
Articles or these By-Laws.
SECTION 9. AUDIT AND OTHER COMMITTEES OF THE BOARD.
The Board shall, by resolution adopted by a majority of
the Full Board, designate an Audit Committee comprised of
two or more Directors, which shall have such authority and
exercise such duties as shall be provided by resolution of
the Board. The Board may, by resolution adopted by such
majority, also designate other regular or special
committees of the Board ("Committees"), in each case
comprised of two or more Directors and to have such powers
and exercise such duties as shall be provided by
resolution of the Board.
SECTION 10. RESIGNATIONS. Any Director may resign
at any time by giving written notice to the Board, the
Chairman, the President or the Secretary. Any such
resignation shall take effect when delivered unless the
notice specifies a later effective date. Unless otherwise
specified in the notice, the acceptance of such
resignation shall not be necessary to make it effective.
ARTICLE V
OFFICERS
SECTION 1. OFFICERS. The Officers shall be the
President, one or more Vice Presidents, the Secretary and
the Treasurer, and may include one or more Assistant
Secretaries, one or more Assistant Treasurers, a
Controller and one or more Assistant Controllers. Any two
or more offices may be held by the same person. The Board
may from time to time elect or appoint such other Officers
as it shall deem necessary, who shall exercise such powers
and perform such duties as may be prescribed from time to
time by these By-Laws or, in the absence of a provision in
these By-Laws in respect thereto, as may be prescribed
from time to time by the Board.
SECTION 2. ELECTION OF OFFICERS. The Officers shall
be elected by the Board at the Annual Board Meeting and
shall hold office for one year or until their respective
successors shall have been duly elected and shall have
qualified; provided, however, that the Board may at any
time elect one or more persons to new or different offices
and/or change the title, designation and duties and
responsibilities of any of the Officers consistent with
the law, the Articles and these By-Laws.
SECTION 3. VACANCIES; REMOVAL. Any vacancy among
the Officers may be filled for the unexpired term by the
Board. Any Officer may be removed at any time by the
affirmative vote of a majority of the Full Board.
SECTION 4. DELEGATION OF DUTIES. In the case of the
absence, disability, death, resignation or removal from
office of any Officer, or for any other reason that the
Board shall deem sufficient, the Board may delegate, for
the time being, any or all of the powers or duties of such
Officer to any other Officer or to any Director.
SECTION 5. PRESIDENT. The President shall be a
Director and, subject to the control of the Board, shall
have general charge of and supervision and authority over
the business and affairs of the Corporation, and shall
have such other powers and perform such other duties as
are incident to this office and as may be assigned to him
by the Board. In the case of the absence or disability of
the Chairman or if no Chairman shall be elected or
appointed by the Board, the President shall preside at all
Shareholders' Meetings and Board Meetings.
SECTION 6. VICE PRESIDENTS. Each of the Vice
Presidents shall have such powers and perform such duties
as may be prescribed for him by the Board or delegated to
him by the President. In the case of the absence,
disability, death, resignation or removal from office of
the President, the powers and duties of the President
shall, for the time being, devolve upon and be exercised
by the Executive Vice President, if there be one, and if
not, then by such one of the Vice Presidents as the Board
or the President may designate, or, if there be but one
Vice President, then upon such Vice President; and he
shall thereupon, during such period, exercise and perform
all of the powers and duties of the President, except as
may be otherwise provided by the Board.
SECTION 7. SECRETARY. The Secretary shall have the
custody and care of the Seal, records, minutes and the
Stock Book of the Corporation; shall attend all
Shareholders' Meetings and Board Meetings, and duly record
and keep the minutes of their proceedings in a book or
books to be kept for that purpose; shall give or cause to
be given notice of all Shareholders' Meetings and Board
Meetings when such notice shall be required; shall file
and take charge of all papers and documents belonging to
the Corporation; and shall have such other powers and
perform such other duties as are incident to the office of
secretary of a business corporation, subject at all times
to the direction and control of the Board and the
President.
SECTION 8. ASSISTANT SECRETARIES. Each of the
Assistant Secretaries shall assist the Secretary in his
duties and shall have such other powers and perform such
other duties as may be prescribed for him by the Board or
delegated to him by the President. In case of the
absence, disability, death, resignation or removal from
office of the Secretary, his powers and duties shall, for
the time being, devolve upon such one of the Assistant
Secretaries as the Board, the President or the Secretary
may designate, or, if there be but one Assistant
Secretary, then upon such Assistant Secretary; and he
shall thereupon, during such period, exercise and perform
all of the powers and duties of the Secretary, except as
may be otherwise provided by the Board.
SECTION 9. TREASURER. The Treasurer shall have
control over all records of the Corporation pertaining to
moneys and securities belonging to the Corporation; shall
have charge of, and be responsible for, the collection,
receipt, custody and disbursements of funds of the
Corporation; shall have the custody of all securities
belonging to the Corporation; shall keep full and accurate
accounts of receipts and disbursements in books belonging
to the Corporation; and shall disburse the funds of the
Corporation as may be ordered by the Board, taking proper
receipts or making proper vouchers for such disbursements
and preserving the same at all times during his term of
office. When necessary or proper, he shall endorse on
behalf of the Corporation all checks, notes or other
obligations payable to the Corporation or coming into his
possession for or on behalf of the Corporation, and shall
deposit the funds arising therefrom, together with all
other funds and valuable effects of the Corporation coming
into his possession, in the name and the credit of the
Corporation in such depositories as the Board from time to
time shall direct, or in the absence of such action by the
Board, as may be determined by the President or any Vice
President. If the Board has not elected a Controller or
an Assistant Controller, or in the absence or disability
of the Controller and each Assistant Controller or if, for
any reason, a vacancy shall occur in such offices, then
during such period the Treasurer shall have, exercise and
perform all of the powers and duties of the Controller.
The Treasurer shall also have such other powers and
perform such other duties as are incident to the office of
treasurer of a business corporation, subject at all times
to the direction and control of the Board and the
President.
If required by the Board, the Treasurer shall give
the Corporation a bond, in such an amount and with such
surety or sureties as may be ordered by the Board, for the
faithful performance of the duties of his office and for
the restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of
whatever kind in his possession or under his control
belonging to the Corporation.
SECTION 10. ASSISTANT TREASURERS. Each of the
Assistant Treasurers shall assist the Treasurer in his
duties, and shall have such other powers and perform such
other duties as may be prescribed for him by the Board or
delegated to him by the President. In case of the
absence, disability, death, resignation or removal from
office of the Treasurer, his powers and duties shall, for
the time being, devolve upon such one of the Assistant
Treasurers as the Board, the President or the Treasurer
may designate, or, if there be but one Assistant
Treasurer, then upon such Assistant Treasurer; and he
shall thereupon, during such period, exercise and perform
all the powers and duties of the Treasurer except as may
be otherwise provided by the Board. If required by the
Board, each Assistant Treasurer shall likewise give the
Corporation a bond, in such amount and with such surety or
sureties as may be ordered by the Board, for the same
purposes as the bond that may be required to be given by
the Treasurer.
SECTION 11. CONTROLLER. The Controller shall have
direct control over all accounting records of the
Corporation pertaining to moneys, properties, materials
and supplies, including the bookkeeping and accounting
departments; shall have direct supervision over the
accounting records in all other departments pertaining to
moneys, properties, materials and supplies; shall render
to the President and the Board, at Regular Board Meetings
or whenever the same shall be required, an account of all
his transactions as Controller and of the financial
condition of the Corporation; and shall have such other
powers and perform such other duties as are incident to
the office of controller of a business corporation,
subject at all times to the direction and control of the
Board and the President.
SECTION 12. ASSISTANT CONTROLLERS. Each of the
Assistant Controllers shall assist the Controller in his
duties, and shall have such other powers and perform such
other duties as may be prescribed for him by the Board or
delegated to him by the President. In case of the
absence, disability, death, resignation or removal from
office of the Controller, his powers and duties shall, for
the time being, devolve upon such one of the Assistant
Controllers as the Board, the President or the Controller
may designate, or, if there be but one Assistant
Controller, then upon such Assistant Controller; and he
shall thereupon, during such period, exercise and perform
all the powers and duties of the Controller, except as may
be otherwise provided by the Board.
ARTICLE VI
CERTIFICATES FOR SHARES
SECTION 1. CERTIFICATES. Certificates for Shares
("Certificates") shall be in such form, consistent with
law and the Articles, as shall be approved by the Board.
Certificates for each class, or series within a class, of
Shares, shall be numbered consecutively as issued. Each
Certificate shall state the name of the Corporation and
that it is organized under the laws of the State of
Indiana; the name of the registered holder; the number and
class and the designation of the series, if any, of the
Shares represented thereby; and a summary of the
designations, relative rights, preferences and limitations
applicable to such class and, if applicable, the
variations in rights, preferences and limitations
determined for each series and the authority of the Board
to determine such variations for future series; provided,
however, that such summary may be omitted if the
Certificate states conspicuously on its front or back that
the Corporation will furnish the Shareholder such
information upon written request and without charge. Each
Certificate shall be signed (either manually or in
facsimile) by (i) the President or a Vice President and
(ii) the Secretary or an Assistant Secretary, or by any
two or more Officers that may be designated by the Board,
and may have affixed thereto the Seal, which may be a
facsimile, engraved or printed.
SECTION 2. RECORD OF CERTIFICATES. Shares shall be
entered in the Stock Book as they are issued, and shall be
transferable on the Stock Book by the holder thereof in
person, or by his attorney duly authorized thereto in
writing, upon the surrender of the outstanding Certificate
therefor properly endorsed.
SECTION 3. LOST OR DESTROYED CERTIFICATES. Any
person claiming a Certificate to be lost or destroyed
shall make affidavit or affirmation of that fact and, if
the Board or the President shall so require, shall give
the Corporation and/or the transfer agents and registrars,
if they shall so require, a bond of indemnity, in form and
with one or more sureties satisfactory to the Board or the
President and/or the transfer agents and registrars, in
such amount as the Board or the President may direct
and/or the transfer agents and registrars may require,
whereupon a new Certificate may be issued of the same
tenor and for the same number of Shares as the one alleged
to be lost or destroyed.
SECTION 4. SHAREHOLDER ADDRESSES. Every Shareholder
shall furnish the Secretary with an address to which
notices of Meetings and all other notices may be served
upon him or mailed to him, and in default thereof notices
may be addressed to him at his last known address or at
the Principal Office.
ARTICLE VII
CORPORATE BOOKS AND RECORDS
SECTION 1. PLACES OF KEEPING. Except as otherwise
provided by law, the Articles or these By-Laws, the books
and records of the Corporation (including the "Corporate
Records," as defined in the Articles) may be kept at such
place or places, within or without the State of Indiana,
as the Board may from time to time by resolution determine
or, in the absence of such determination by the Board, as
shall be determined by the President.
SECTION 2. STOCK BOOK. The Corporation shall keep
at the Principal Office the original Stock Book or a
duplicate thereof, or, in case the Corporation employs a
stock registrar or transfer agent within or without the
State of Indiana, another record of the Shareholders in a
form that permits preparation of a list of the names and
addresses of all the Shareholders, in alphabetical order
by class of Shares, stating the number and class of Shares
held by each Shareholder (the "Record of Shareholders").
SECTION 3. INSPECTION OF CORPORATE RECORDS. Any
Shareholder (or the Shareholder's agent or attorney
authorized in writing) shall be entitled to inspect and
copy at his expense, after giving the Corporation at least
five business days written notice of his demand to do so,
the following Corporate Records: (1) the Articles; (2)
these By-Laws; (3) minutes of all Shareholders' Meetings
and records of all actions taken by the Shareholders
without a meeting (collectively, "Shareholders Minutes")
for the prior three years; (4) all written communications
by the Corporation to the Shareholders including the
financial statements furnished by the Corporation to the
Shareholders for the prior three years; (5) a list of the
names and business addresses of the current Directors and
the current Officers; and (6) the most recent Annual
Report of the Corporation as filed with the Secretary of
State of Indiana. Any Shareholder (or the Shareholder's
agent or attorney authorized in writing) shall also be
entitled to inspect and copy at his expense, after giving
the Corporation at least five business days written notice
of his demand to do so, the following Corporate Records,
if his demand is made in good faith and for a proper
purpose and describes with reasonable particularity his
purpose and the records he desires to inspect, and the
records are directly connected with his purpose: (1) to
the extent not subject to inspection under the previous
sentence, Shareholders Minutes, excerpts from minutes of
Board Meetings and of Committee meetings, and records of
any actions taken by the Board or any Committee without a
meeting; (2) appropriate accounting records of the
Corporation; and (3) the Record of Shareholders.
SECTION 4. RECORD DATE. The Board may, in its
discretion, fix in advance a Record Date not more than
seventy days before the date (a) of any Shareholders'
Meeting, (b) for the payment of any dividend or the making
of any other distribution, (c) for the allotment of
rights, or (d) when any change or conversion or exchange
of Shares shall go into effect. If the Board fixes a
Record Date, then only Shareholders who are Shareholders
of record on such Record Date shall be entitled (a) to
notice of and/or to vote at any such Meeting, (b) to
receive any such dividend or other distribution, (c) to
receive any such allotment of rights, or (d) to exercise
the rights in respect of any such change, conversion or
exchange of Shares, as the case may be, notwithstanding
any transfer of Shares on the Stock Book after such Record
Date.
SECTION 5. TRANSFER AGENTS; REGISTRARS. The Board
may appoint one or more transfer agents and registrars for
its Shares and may require all Certificates to bear the
signature either of a transfer agent or of a registrar, or
both.
ARTICLE VIII
CHECKS, DRAFTS, DEEDS AND SHARES OF STOCK
SECTION 1. CHECKS, DRAFTS, NOTES, ETC. All checks,
drafts, notes or orders for the payment of money of the
Corporation shall, unless otherwise directed by the Board
or otherwise required by law, be signed by one or more
Officers as authorized in writing by the President. In
addition, the President may authorize any one or more
employees of the Corporation ("Employees") to sign checks,
drafts and orders for the payment of money not to exceed
specific maximum amounts as designated in writing by the
President for any one check, draft or order. When so
authorized by the President, the signature of any such
Officer or Employee may be a facsimile signature.
SECTION 2. DEEDS, NOTES, BONDS, MORTGAGES,
CONTRACTS, ETC. All deeds, notes, bonds and mortgages
made by the Corporation, and all other written contracts
and agreements, other than those executed in the ordinary
course of corporate business, to which the Corporation
shall be a party, shall be executed in its name by the
President, a Vice President or any other Officer so
authorized by the Board and, when necessary or required,
the Secretary or an Assistant Secretary shall attest the
execution thereof. All written contracts and agreements
into which the Corporation enters in the ordinary course
of corporate business shall be executed by any Officer or
by any other Employee designated by the President or a
Vice President to execute such contracts and agreements.
SECTION 3. SALE OR TRANSFER OF STOCK. Subject
always to the further orders and directions of the Board,
any share of stock issued by any corporation and owned by
the Corporation (including reacquired Shares of the
Corporation) may, for sale or transfer, be endorsed in the
name of the Corporation by the President or a Vice
President, and said endorsement shall be duly attested by
the Secretary or an Assistant Secretary either with or
without affixing thereto the Seal.
SECTION 4. VOTING OF STOCK OF OTHER CORPORATIONS.
Subject always to the further orders and directions of the
Board, any share of stock issued by any other corporation
and owned or controlled by the Corporation (an "Investment
Share") may be voted at any shareholders' meeting of such
other corporation by the President or by a Vice President.
Whenever, in the judgment of the President, it is
desirable for the Corporation to execute a proxy or give a
shareholder's consent in respect of any Investment Share,
such proxy or consent shall be executed in the name of the
Corporation, by the President or a Vice President, and,
when necessary or required, shall be attested by the
Secretary or an Assistant Secretary either with or without
affixing thereto the Seal. Any person or persons
designated in the manner above stated as the proxy or
proxies of the Corporation shall have full right, power
and authority to vote an Investment Share the same as such
Investment Share might be voted by the Corporation.
ARTICLE IX
FISCAL YEAR
SECTION 1. FISCAL YEAR. The Corporation's fiscal
year shall begin on October 1 of each year and end on
September 30 of the following year.
ARTICLE X
AMENDMENTS
SECTION 1. AMENDMENTS. These By-Laws may be
altered, amended or repealed, in whole or in part, and new
By-Laws may be adopted, at any Board Meeting by the
affirmative vote of a majority of the Full Board.
EXHIBIT 10-Q.19
NATURAL GAS FIRM SUPPLY AGREEMENT
This Natural Gas Firm Supply Agreement ("Agreement"), is
made, entered into, and effective, as of the 1st day of
October, 1994 by and between ANADARKO TRADING COMPANY
(Seller), and INDIANA GAS COMPANY, INC. (Buyer).
Recitals
1. Seller is a corporation incorporated and existing
u nder the laws of the State of Delaware with its
principal place of business at 17001 Northchase Drive,
Houston, Texas.
2. Buyer is a corporation incorporated and existing
un der the laws of the State of Indiana, with its
principal place of business at 1630 North Meridian
Street, Indianapolis, Indiana.
3. This Agreement contains the mutual promises,
warranties, and covenants pursuant to which Buyer as a
purchaser of natural gas, and Seller as a merchant of
natural gas, shall perform the transactions described
herein.
4. Under this Agreement, Seller agrees to provide
natu ral gas on a firm basis, consistent with the terms
and conditions contained herein. Seller's ability to
provide natural gas on a firm basis, as represented to
Buyer and as agreed to herein, is a fundamental
inducement to Buyer's decision to enter this Agreement
and forms an essential element of the basis for the
bargained exchanges herein.
Definitions
As used herein, the following words
shal l have the following definitions:
A. The term
"Transporter" shall m ean Panhandle Eastern
Pipe Line Company, or its successor.
B. The term
"Transporter's Tariff " shall mean the tariff
provisions of Transporter, as approved by the
Federal Energy Regulatory Commission, or any
successor thereto, ("FERC"), including
changes to such tariff made after this
Agreement is effective, and Buyer's
contractual arrangements with Transporter.
If FERC should determine that Transporter's
Tariff shall cease to apply, in whole or in
part, to transactions hereunder, the parties
will promptly meet to determine and negotiate
mutually acceptable replacement guidelines
and standards. In that event, until an
agreement is reached, the most
recently effective Transporter's Tariff shall
continue to apply.
C. The term "Btu" shall
mean Brit ish thermal unit, as defined in
Transporter's Tariff.
D. The term "Contract
Month" shal l mean a calendar month during
the effectiveness of this Agreement, as
interpreted in light of Transporter's tariff.
E. The term "Day" shall
be define d as it is defined in Transporter's
Tariff, or as applied by Transporter.
F. The term "Gas" shall
mean natu ral gas, which shall meet the
quality specifications in this Agreement and
Transporter's Tariff.
G. The terms "MMBtu,"
"Dekatherm" or "DTH" shall mean one million
(1,000,000) British thermal units.
H. The term "Maximum
Daily Quanti ty" shall mean the quantity of
Gas which Seller shall stand ready to supply
on any Day during a Contract Month to the
extent nominated by Buyer for purchase as the
"Nominated Daily Quantity".
I. The term "Nominated
Daily Quan tity" shall mean the quantity of
Gas which Seller shall deliver to Transporter
for the account of Buyer on a particular Day,
which quantity shall be scheduled by Buyer
pursuant to Paragraph 5, labeled "Scheduling
Procedures", of this Agreement, but not to
exceed the Maximum Daily Quantity.
J. The term "Receipt
Point(s)" sh all mean the point or points on
Transporter's system where Gas quantities are
delivered hereunder by Seller to Buyer.
1. Term: The term of this Agreement shall be from
Oct ober 1, 1994 through September 30, 1995.
2. Quantity:
(a) Subject to the provisions herein,
Seller represents, agrees, and assures that Seller
can and shall make available on a firm basis, to
the extent scheduled by Buyer as the Nominated
Daily Quantity, the following Maximum Daily
Quantities of Gas for purchase by Buyer in
accordance with the following schedule as to each
Contract Month during the term of this Agreement:
Contract Month Maximum Daily Quantity
October, 1994 - 0 MMBtu per day
November, 1994 - 0 MMBtu per day
December, 1994 - 50,000 MMBtu per day
January, 1995 - 50,000 MMBtu per day
February, 1995 - 50,000 MMBtu per day
March, 1995 - 0 MMBtu per day
April, 1995 - 0 MMBtu per day
May, 1995 - 0 MMBtu per day
June, 1995 - 0 MMBtu per day
July, 1995 - 0 MMBtu per day
August, 1995 - 0 MMBtu per day
September, 1995 - 0 MMBtu per day
(b) No provision of this Agreement
shall be construed to require Buyer to purchase or
take any minimum quantity of Gas, or to pay
Commodity Charges for any minimum quantity not
taken except as set forth in Paragraph 14 (b)
hereof.
3. Price: Subject to the terms of this Agreement,
Buy er shall pay to Seller a Commodity Reservation
Charge and a Commodity Charge. Those charges shall be
determined as follows:
(a) Commodity Reservation Charge - Each
Cont ract Month, Buyer shall pay to Seller an
amount determined by multiplying the applicable
Maximum Daily Quantity set forth in Paragraph 2
above by the Reservation Rate set forth for that
particular Contract Month in the following
schedule times the number of Days in that
particular Contract Month.
Contract Month Reservation Rate
October, 1994 $0.000 per MMBtu
November, 1994 $0.000 per MMBtu
December, 1994 $0.085 per MMBtu
January, 1995 $0.085 per MMBtu
February, 1995 $0.085 per MMBtu
March, 1995 $0.000 per MMBtu
April, 1995 $0.000 per MMBtu
May, 1995 $0.000 per MMBtu
June, 1995 $0.000 per MMBtu
July, 1995 $0.000 per MMBtu
August, 1995 $0.000 per MMBtu
September, 1995 $0.000 per MMBtu
(b) Commodity Charge - Buyer and Seller
inte nd to apply a method of daily pricing,
figured from a commodity price index, to commodity
sales under this Agreement. Buyer shall pay to
Seller each Contract Month an amount determined by
summing all applicable "Daily Amounts" for the
Contract Month. A "Daily Amount" shall apply to
each day during the Contract Month for which Buyer
has nominated quantities for purchase. The "Daily
Amounts" shall be determined by multiplying i) the
quantities of Gas actually delivered to Buyer
under this Agreement at the Receipt Point(s) for
the particular Day of the Contract Month, up to
Buyer's Nominated Daily Quantity, ii) by a price
per MMBtu determined using the arithmetic average
of the high and low prices in the price range
reported in Gas Daily, in the table "DAILY PRICE
SURVEY", for "PEPL North--Texas Panhandle", for
the applicable Day, which price shall be deemed to
be a delivered price to the Receipt Point(s),
inclusive of actual transportation charges
(including ACA, GRI, fuel, all applicable
surcharges, gathering costs, transition costs, and
take or pay, or other costs, if any) from the
wellhead to the Receipt Point(s), and shall
include all royalties and all present and future
production, delivery, severance, and excise taxes,
and all other costs of delivery to the Receipt
Point(s). As to any Day for which Gas Daily for
any reason (e.g. holidays and weekends) does not
publish the above referenced prices, the
applicable prices shall be that utilized for the
last prior Day such was published.
If a Receipt Point(s) other than
mainlin e Receipt Point(s) is used, any gathering,
transportation or other costs imposed on Buyer to
transport the gas to Transporter's mainline shall
be deducted from the Commodity Charge.
(c) Applicable Commodity Charge Index.
If a t any time Gas Daily (or any successor
publication selected hereunder) is no longer
published, or if the specific postings referenced
in Gas Daily are no longer published, or no longer
reflect the original posting methodology used at
the time of the execution of this Agreement, the
commodity price shall be temporarily determined by
reference to applicable price postings in NGI's
Daily Gas Price Index and the Parties shall
promptly negotiate a new mutually agreeable method
and/or successor publication from which to
determine commodity pricing.
4. Taxes:
(a) Subject to the terms of this
Agreement, Seller shall pay all taxes imposed with
respect to the Gas delivered to Buyer hereunder
prior to delivery at the Receipt Point(s) and
Buyer shall pay all taxes imposed upon Buyer with
respect to such Gas on and after delivery thereof
to Buyer at the Receipt Point(s).
(b) If any sale of Gas from Seller to
Buyer pursuant to this Agreement shall be subject
to sales, use, or gross receipts tax, such tax
shall be borne by the Buyer. It is expressly
understood that the price mutually agreed to
between Seller and Buyer as provided for in
Paragraph 3 above shall be exclusive of sales,
use, or gross receipts tax related to the sale
from Seller to Buyer under this Agreement. Buyer
shall provide documentation to Seller of Buyer's
exemption from any tax that may otherwise apply
under this Agreement. If documentation is not
provided, Buyer shall reimburse Seller for any
taxes paid by Seller which are attributable to
Buyer under this Agreement.
5. Scheduling Procedures: Scheduling of purchases
hereunder shall be made by Buyer according to the
following procedures:
By 12:00 p.m. (noon), Eastern Standard Time, on th
e fourth day preceding the day Transporter designates
as the day on which nomination information must be
submitted in order to ensure timely scheduling of gas
transportation on the first Day of the following
Contract Month (Transporter's Nomination Deadline),
Buyer shall provide written notification to Seller of
the initial Nominated Daily Quantity, not to exceed the
Maximum Daily Quantity, which Seller is to deliver to
Transporter for the account of Buyer on the first Day
of that following Contract Month.
By 12:00 p.m. (noon), Eastern Standard Time, on th
e Day immediately preceding Transporter's Nomination
Deadline, Seller shall provide to Buyer, in writing,
all information required pursuant to Transporter's
Tariff, and other pertinent nomination and scheduling
guidelines and procedures (Nomination Information), for
Buyer to make a complete and valid nomination for gas
transportation service to commence on the first Day of
the following Contract Month. Until subsequently
changed by Buyer pursuant to the following, Seller
shall continue to deliver the initial Nominated Daily
Quantity to Transporter, for the account of Buyer, each
Day of the following Contract Month.
In its sole discretion, Buyer may elect to
prospectively change the Nominated Daily Quantity by
providing notice to Seller of the changed Nominated
Daily Quantity and the Day on which the changed
Nominated Daily Quantity is to be effective (the
Effective Date). Such notification shall be provided
by Buyer to Seller via telephone with concurrent
transmission by telefacsimile to Seller's
representative(s) and shall be provided not less than
four (4) hours prior to the time transporter specifies
as the time beyond which Transporter will not accept
and schedule changes to a valid nomination for gas
transportation service to occur on the Effective Date;
which time, specified by Transporter, is the Nomination
Cut-off Time. Not less than two (2) hours prior to the
Nomination Cut-off Time, Seller shall provide to
Buyer's representative(s) all Nomination Information
required to make a complete and valid nomination for
gas transportation service to commence on the Effective
Date. Seller shall continue to deliver to Transporter,
for the account of Buyer, the changed Nominated Daily
Quantity each Day unless and until Buyer elects to
again change the Nominated Daily Quantity pursuant to
the preceding.
Buyer may elect to prospectively change the Nomina
ted Daily Quantity for any Day of the month.
6. Receipt Point(s): The Receipt Point(s) hereunder
s hall be at the ITP-ATC Mainline Pool Point, Meter
Station PO 9995 located on Transporter's mainline
system, unless both parties reach prior mutual
agreement on the use of different Receipt Point(s) for
a particular Contract Month or portion thereof. Seller
shall have a firm obligation to deliver the Nominated
Daily Quantity to Buyer at the Receipt Point(s). Buyer
shall have the discretion to waive the requirement that
a mainline receipt point be used, provided, however,
that no such waiver shall constitute a waiver
pertaining to any other or future purchases and any
such waiver shall not prejudice the ability of Buyer to
insist on future mainline deliveries.
7. Operations: Buyer and Seller agree to accept for
purposes of this Agreement the applicable quality,
delivery pressure, measurement requirements and other
applicable rules, procedures, guidelines, tariff
provisions, contractual arrangements and policies of
Transporter, as the same may change from time to time.
8. Gas Quality: Gas delivered hereunder shall comply
with the quality and other specifications of
Transporter's Tariff, and shall be merchantable and
free from impurities that could affect its safe and
normal use, and free from hazardous or toxic
substances, wastes, or other contaminants.
9. Penalties: Seller shall be liable for all
penaltie s, cashouts, or other costs imposed on Buyer
or Seller by any third parties, including Seller's
transporters and Transporter, to the extent that such
penalties are caused by Seller's actions or inactions.
Buyer shall be liable for all penalties, cashouts, or
other costs imposed on Buyer by Transporter, to the
extent that such penalties are caused by Buyer's
actions or inactions. Seller agrees to use all
reasonable efforts to acquire operational balancing
agreements with Transporter, or other arrangements to
minimize the possibility of imbalance at the Receipt
Point(s) associated with Buyer's quantities.
10. Measurement: Measurement and determination of the
quantity of Gas delivered to Buyer at the Receipt
Point(s) shall be made in accordance with the
measurement procedures provided in Transporter's
Tariff.
11. Billing and Payment:
(a) On or before the fifteenth (15th)
day fo llowing each Contract Month, Seller shall
furnish, or have furnished, one statement to Buyer
stating the quantity of Gas delivered to the
Receipt Point(s) for Buyer's account in the
preceding Contract Month and the total dollar
amount due Seller pursuant to this Agreement (the
"Statement"). Seller's Statement shall reflect
both Commodity Reservation and Commodity Charges
due to Seller for the preceding Contract Month.
As to Commodity Charges, Seller's Statement shall
be based on Buyer's Nominated Daily Quantity for
each Day of such Contract Month, unless actual
information is available indicating Buyer received
less than the Nominated Daily Quantity, in which
event the statement shall be based on the actual
information or best available estimate. On or
before the twenty-fifth (25th) day of the month or
the tenth day following the receipt of Seller's
statement ("Due Date"), whichever is later, Buyer
shall make payment to Seller by wire transfer as
set forth in Paragraph 15 hereof.
(b) Buyer shall have the right to
offset amo unts payable by Seller, due from Seller
to Buyer, or costs attributable to Seller against
any payments from Buyer to Seller, provided Buyer
first provides to Seller documentation supporting
such offset amounts.
(c) Interest shall accrue on all late
paymen ts commencing on the applicable Due Date at
the then current prime rate of National City Bank,
Indianapolis, Indiana, or its successor, or the
maximum lawful rate, whichever is lower.
(d) If the Statements above are based
on nom inations or estimates of quantities
delivered, Seller shall have the duty to promptly
reconcile such amounts with actual deliveries and
remedy the imbalance in accordance with the
procedures specified in Paragraphs 9 and 14 and as
otherwise provided herein, and in accordance with
Transporter's procedures.
12. Force Majeure: All obligations of the parties to
this Agreement, except for the obligation to make
payments due hereunder, shall be suspended while and
only for so long as compliance is prevented by a cause
beyond the control of the party claiming force majeure,
such as an "Act of God", war, civil disturbance,
Federal or State or local law, or binding order of a
court or governmental agency, provided the suspension
shall be only to the extent performance was prevented
by the event of force majeure and provided the party
claiming force majeure provides immediate notice by
telephone and followed by prompt written notice by
telecopy with reasonably full particulars to the other
party at or near the commencement of such force
majeure.
Notwithstanding the foregoing, the events or
occurrences described above shall relieve Seller of its
obligations under this Agreement only to the extent
Seller's performance is prevented and only after Seller
has first curtailed all interruptible sales of Gas
supplies to be delivered to Transporter, and curtailed
on a prorata basis all firm sales of Gas supplies to be
delivered to Transporter. A party claiming force
majeure hereunder shall have the duty to make all
reasonable efforts to remedy the force majeure
condition as promptly as possible.
Nothing in this force majeure provision shall serv
e to absolve a party hereto from liability for its own
negligence or failure to exercise reasonable care in
performance of this Agreement.
The term force majeure specifically excludes the
following occurrences or events:
(a) the loss, interruption, or
curtailment o f interruptible transportation on
either Transporter or any third party transporter
to effect receipt or delivery of Gas hereunder;
(b) decreases in natural Gas supply due
to a llocation or reallocation of production by
well operators, prorationing, or for other
reasons;
(c) failure of specific, individual
wells or appurtenant facilities in the absence of
a force majeure event broadly affecting other
wells in the same geographic area.
Notice of force majeure must be sent immediately,
without regard to standard business hours, by telephone
and telecopy, with hard copy sent by overnight mail, to
each of the representatives for Buyer or Seller
designated below.
BUYER: SELLER:
Indiana Gas Company, Inc. Anadarko Trading Company
Attn: Curt S. Hribernik Attn: Jake Woodall
Gas Supply Marketing
1630 N. Meridian Street 17001 Northchase Drive
Indianapolis, IN 46202 Houston, TX 77060
Phone: (317) 321-0610 Phone: (713) 874-3263
Telecopy: (317) 921-2760 Telecopy: (713) 874-3354
and and
Indiana Gas Company, Inc. Anadarko Trading Company
Attn: Gas Control Attn: Gas Control
1630 N. Meridian Street 17001 Northchase Drive
Indianapolis, IN 46202 Houston, TX 77060
Phone: (317) 321-0535 Phone: (713)874-3290
Telecopy: (317) 321-0787 After Hours: (800) 375-2337
I.D. #0049
Telecopy: (713) 874-1656
13. Possession and Warranty of Title:
(a) As between the parties hereto,
Seller sh all be in exclusive control and
possession of the Gas delivered hereunder until
the same shall have been received by Transporter
for Buyer's account at the Receipt Point(s). Upon
such delivery and receipt, control and possession
will transfer to Transporter, provided however,
that this provision does not relieve Seller of its
responsibility for injuries or damage caused if
Seller fails to meet the quality standards of this
Agreement, or Transporter's Tariff. Title to Gas
delivered hereunder shall pass at the Receipt
Point(s).
(b) Seller warrants to Buyer that it
has goo d and marketable title and/or authority to
sell all Gas delivered hereunder and such Gas is
free and clear from all liens, claims, and
encumbrances of every kind. Seller will indemnify
and save Buyer harmless against all losses,
damages and expenses of every character including,
but not limited to, reasonable attorneys' fees,
with respect to the Gas delivered by it to Buyer
on account of royalties, taxes, payments or other
charges applicable before delivery of the Gas
hereunder, as well as any liens, encumbrances and
claims of every kind which relate to control or
possession of the Gas prior to delivery by Seller
under this Agreement.
14. Assurance of Supply:
(a) In the event Seller fails to
deliver the quantities of Gas as agreed herein for
any reason other than force majeure, Seller shall
reimburse Buyer within 15 days of receipt of an
invoice and supporting detail from Buyer for the
difference, if any, between the price per MMBtu
which Buyer would have paid Seller for the
deficient portion of the Nominated Daily Quantity
under this Agreement, and the price per MMBtu for
the same quantity of Gas which Buyer or its agents
may acquire in replacement thereof. Buyer shall
use its reasonable efforts to obtain such
replacement Gas at the lowest price reasonably
possible.
Seller shall reimburse Buyer for
actual damages incurred related to the
underdelivery, including incremental costs and
expenses incurred by Buyer related to the
underdelivery or to the replacement of Gas as a
result of Seller's failure to deliver as agreed,
and including Transporter's demand charges
incurred without corresponding benefit to Buyer,
reimbursement for all penalties, imbalances, and
cashouts incurred. If the failure to deliver is
substantial, Seller shall forfeit all Commodity
Reservation Charges to otherwise be paid under
this Agreement for that Contract Month. The
amount of reimbursement due pursuant to this
Paragraph shall be Buyer's sole and exclusive
monetary remedy. In addition to the remedies
above, Buyer shall retain the right to terminate
this Agreement. In the event of a force majeure
occasion affecting Seller's deliveries, if Seller
fails to prorate curtail in accordance with
Paragraph 12 of this Agreement, Buyer shall also
have the right to seek specific performance and/or
injunctive relief to seek delivery of Buyer's
proportionate share.
Assurance of Market Demand:
(b) In the event Buyer fails to
purchase Buy er's Nominated Daily Quantity
scheduled by Buyer for a particular Contract
Month, for reason other than as permitted by this
Agreement, Buyer shall reimburse Seller within 15
days of receipt of an invoice and supporting
detail from Seller for actual damages incurred
related to such failure to purchase, including the
difference (if any) between the price per MMBtu
which Seller would have received from Buyer for
the deficient portion of the Nominated Daily
Quantity for the particular Contract Month under
this Agreement, and the price per MMBtu for the
same quantity of Gas which Seller sells to a third
party in replacement thereof. In addition, Buyer
shall reimburse Seller for actual damages incurred
related to such failure to purchase including
incremental costs and expenses incurred by Seller
related to the replacement sale of the Gas as a
result of Buyer's failure to purchase the
Nominated Daily Quantity as scheduled. Seller
shall use its best efforts to sell such
replacement Gas at the highest price possible,
pursuant to arms length negotiation with a
nonaffiliated entity. If or to the extent Seller
is unable to sell any portion of the Gas in
question to a replacement market(s), at Seller's
option, Buyer shall take and pay for an equivalent
amount of Gas in mutually agreeable subsequent
months at the commodity price in effect for the
month in which the deficiency occurred. The
amount of reimbursement due pursuant to this
Paragraph and the applicable Commodity Reservation
Charge shall be Seller's sole and exclusive
remedy.
15. Correspondence: Except as provided in Paragraph 1
2 above, any notice, statement or bill shall be in
writing and shall be duly delivered when (i) mailed,
postage prepaid, by registered, certified, or first
class mail, or (ii) sent by prepaid overnight delivery
to the applicable address as follows, or (iii) by
telecopy directed to the appropriate person and
telecopy number below with hard copy also delivered as
in (i) or (ii) above:
NOTICES TO BUYER NOTICES TO SELLER
INDIANA GAS COMPANY,INC. ANADARKO TRADING COMPANY
1630 N. Meridian St. 17001 Northchase Drive
Indianapolis, IN 46202 Houston, TX 77060
Attn: Curt S. Hribernik Attn: Jake Woodall
Phone: (317) 321-0610 Phone: (713) 874-3263
Telecopy: (317) 921-2760 Telecopy: (713) 874-3354
INVOICES TO BUYER INVOICES TO SELLER
INDIANA GAS COMPANY, INC. ANADARKO TRADING COMPANY
1630 N. Meridian St. 17001 Northchase Drive
Indianapolis, IN 46202 Houston, TX 77060
Attn: Corporate Accounting Attn: Jake Woodall
Phone: (317) 321-0610 Phone: (713) 874-3263
Telecopy: (317) 921-2760 Telecopy: (713) 874-3354
PAYMENTS TO BUYER PAYMENTS TO SELLER
INDIANA GAS COMPANY, INC. ANADARKO TRADING COMPANY
1630 N. Meridian St. Mellon Bank, N.A.
Indianapolis, IN 46202 Pittsburgh, PA
Attn: Curt S. Hribernik Account No. 1157237
Phone: (317) 321-0610 ARA No. 043000261
Telecopy: (317) 921-2760 Confirmation of transfer:
Ms. Lanette Chapman
Phone: (713) 874-3364
16. Miscellaneous:
(a) This Agreement is subject to all
applica ble laws, orders, rules, and regulations
of any State or Federal governmental body or
official having jurisdiction and both Seller and
Buyer agree that the transactions agreed to
hereunder shall be conditioned upon compliance
with all such laws, orders, rules, and
regulations.
(b) Seller and Buyer expressly agree
that la ws of the State of Indiana, except the law
regarding conflict of laws, shall govern the
validity, construction, interpretation and effect
of this Agreement. All actions relating to this
Agreement must be commenced and litigated in
Indiana. Venue for any such litigation shall be
in the United States District Court for the
Southern District of Indiana, if jurisdictional
requirements are met, otherwise in a court outside
of Buyer's service area. Seller waives any
argument that Seller lacks the minimum contacts
with Indiana sufficient to permit an Indiana court
to exercise lawful jurisdiction.
(c) Each party shall have the right
followin g the provision of reasonable notice and
at all reasonable hours to examine the appropriate
books and records of the other party to the extent
necessary to verify compliance with this
Agreement, including the accuracy of any
statement, payment, a force majeure claim or other
claimed excuse of performance. In the event an
error is discovered and communicated to the other
party, such error shall be adjusted promptly.
(d) Buyer shall be entitled to request
Selle r to perform such deliverability, quality,
or other tests as may be necessary in Buyer's
reasonable judgment, to confirm Seller's
compliance with this Agreement and Transporter's
Tariff. Buyer has the right to attend and observe
such tests, which shall be performed at Seller's
sole expense.
(e) During any month, if the quantities
rece ived by Transporter for Buyer at the Receipt
Point(s), exceed Buyer's nomination for that
Contract Month, with respect to those quantities
Buyer shall have, pursuant to this Agreement, the
right at its discretion to:
(i) if those quantities
have not b een cashed-out by Transporter and
those quantities are the result of Seller's
overdeliveries to the Transporter for Buyer's
account, Buyer shall have the right to
Buyer's choice of the following options:
(a)
purchase those quant ities from Seller
at a mutually agreeable price, or
(b)
require Seller to re move those
quantities from Buyer's account with
Transporter, provided Transporter is
willing to place those quantities on
Seller's account with Transporter.
Moreover, and in that event, Buyer will
have no obligation to Seller with
respect to purchasing those quantities,
and to the extent Buyer has made any
payment to Seller related to those
quantities, Buyer shall be entitled to
reimbursement, which reimbursement will
occur no later than thirty (30) days
from the date Buyer notifies Seller that
those quantities have been removed from
Buyer's account with Transporter and
have been placed on Seller's account
with Transporter.
(ii) If quantities have
been cashed -out by Transporter and said
quantities are the result of Seller's
overdeliveries to Transporter for Buyer's
account, Buyer shall have the right to
Buyer's choice of the following options:
(a) to
remit to Seller t he cash-out price per
MMBtu which is paid to Buyer by
Transporter, or
(b) if
Buyer has paid Se ller for those
quantities, Buyer may receive cash
reimbursement equal to the difference
between the cashout price paid to Buyer
by Transporter, and the price paid by
Buyer to Seller for the cashout
quantity; or
(c) if
Buyer has paid Se ller for those
quantities, Buyer may offset payments to
Seller for the difference between the
cashout price paid to Buyer by
Transporter, and the price paid by Buyer
to Seller for the cashout quantity.
(iii)In addition to the
above remed ies, Seller shall bear the
economic burden of any non-cashout penalties
caused by the overdeliveries.
(f) Either party may pledge, mortgage
or ass ign its rights hereunder as security for
indebtedness. Either party may assign its rights
or obligations under this Agreement to a corporate
affiliate without the consent of the other party.
This Agreement is otherwise non-assignable except
with the prior written consent of Buyer and
Seller.
This Agreement extends to and is
binding upon the respective successors of Buyer
and Seller.
(g) If the Federal Energy Regulatory
Commiss ion ("FERC") issues a rule, regulation,
order or decision during the effectiveness of this
Agreement which would subject Buyer to a
detrimental economic effect from continued
performance due to the effectiveness of the new
rules, regulations, or tariff provisions, Buyer
may within ninety (90) days of the FERC action
give written notice to Seller of any changes to
this Agreement it believes are necessary to
maintain the economic bargain. If Buyer and
Seller are unable to mutually agree upon
appropriate modification(s) within thirty (30)
days following the receipt of the above-referenced
written notice, this Agreement shall terminate
effective the next first day of the month
occurring sixty (60) days following receipt of
such written notice. Both parties shall have the
duty to negotiate in good faith with respect to
such modifications. Upon termination, the
obligations of Buyer and Seller under the
Agreement shall cease with the exception of the
obligation to make payments still owing as to
periods prior to the termination date.
(h) The parties contemplate and
condition al l obligations hereunder on the
ability of Buyer to recover the entirety of all
costs to be paid hereunder from Buyer's customers.
If recovery of all such costs is prevented or
frustrated by an action or omission of a
regulatory or legal authority, Buyer shall have
the right to terminate this Agreement without
further obligation of any kind to Seller except to
pay for Gas already delivered.
(i) Seller shall have the right, but at
no c ost, delay, risk, or expense to Buyer, to
extract and retain liquefiable hydrocarbons and/or
helium, or to have such extracted, through
processing the natural gas delivered hereunder at
a point(s) located on or adjacent to Transporter's
system downstream of the Receipt Point. In the
event Seller elects to process its natural gas
pursuant to this Paragraph, Seller shall not
initiate such processing unless Seller has made
arrangements to keep Buyer whole on an MMBtu basis
in terms of i) the total heating value of the
natural gas to be redelivered to Transporter's
system by Seller for Buyer's account after
processing the natural gas stream as compared to
ii) the total heating value of the natural gas
attributable to natural gas initially sold to
Buyer by Seller at the Receipt Point after
reduction for the fuel required to transport the
natural gas to the inlet of the processing
facility so utilized. Further, such processing
arrangements shall not cause Buyer to incur any
accounting or other administrative duties. All
liquefiable hydrocarbons and/or helium so
extracted under this Paragraph shall become the
property of Seller. Seller's option to commence
the processing of natural gas pursuant to this
Paragraph or to decrease or to increase the extent
of such processing can be exercised from time to
time at Seller's discretion. Seller agrees that
it shall indemnify and hold Buyer harmless from
any and all claims which may arise out of the
extraction or sale of liquefiable hydrocarbons
and/or helium from the natural gas stream sold to
Buyer by Seller under this Agreement including but
not limited to royalties or taxes related thereto.
(j) This Agreement is conditioned on
the con tinued solvency of Buyer and Seller. Both
parties shall have the right to request reasonable
information from the other so as to verify the
continued solvency of the other party. If
reasonable concerns as to the continued solvency
of one party arise, the other party shall be
entitled to reasonable assurances of the other
party's continued ability to perform. If one
party becomes insolvent or seeks bankruptcy
relief, the other party may prospectively
terminate this Agreement on prior notice without
further obligation other than to pay for Gas
previously delivered.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement in duplicate originals.
"SELLER"
ANADARKO TRADING COMPANY
By: ____________________________
Its: ___________________________
"BUYER"
INDIANA GAS COMPANY, INC.
By: ____________________________
Its:____________________________
State of
County of
NOTARIZATION
Before me appeared , who after being
duly sworn, executed this Agreement on behalf of Seller and
acknowledged his authority to sign this contract on behalf
of Seller.
Notary Public
State of
County of
NOTARIZATION
Before me appeared , who after being
duly sworn, executed this Agreement on behalf of Buyer and
acknowledged his authority to sign this contract on behalf
of Buyer.
Notary Public
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Indiana Gas
Company, Inc.'s consolidated financial statements as of September 30, 1994, and
for the fiscal year then ended and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 533,016
<OTHER-PROPERTY-AND-INVEST> 393
<TOTAL-CURRENT-ASSETS> 90,478
<TOTAL-DEFERRED-CHARGES> 26,095
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 649,982
<COMMON> 142,995
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 117,300
<TOTAL-COMMON-STOCKHOLDERS-EQ> 260,295
0
0
<LONG-TERM-DEBT-NET> 156,851
<SHORT-TERM-NOTES> 30,550
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 202,286
<TOT-CAPITALIZATION-AND-LIAB> 649,982
<GROSS-OPERATING-REVENUE> 475,297
<INCOME-TAX-EXPENSE> 19,467
<OTHER-OPERATING-EXPENSES> 407,987
<TOTAL-OPERATING-EXPENSES> 427,454
<OPERATING-INCOME-LOSS> 47,843
<OTHER-INCOME-NET> 2,790
<INCOME-BEFORE-INTEREST-EXPEN> 50,633
<TOTAL-INTEREST-EXPENSE> 16,037
<NET-INCOME> 34,596
0
<EARNINGS-AVAILABLE-FOR-COMM> 34,596
<COMMON-STOCK-DIVIDENDS> 23,400
<TOTAL-INTEREST-ON-BONDS> 14,798
<CASH-FLOW-OPERATIONS> 88,290
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 99
IEI
INDIANA ENERGY, INC.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 9, 1995
TO THE SHAREHOLDERS OF
INDIANA ENERGY, INC.
The annual meeting of shareholders of Indiana Energy, Inc.
(Company), will be held at the principal office of the Company, 1630
North Meridian Street, Indianapolis, Indiana 46202 on Monday, January
9, 1995, at 11 a.m. (Eastern Standard Time), for the following
purposes:
1. To elect four directors of the Company to serve for a term of
three (3) years or until their successors are duly elected and
qualified; and
2. To transact such other business as may properly come before
the meeting, or any adjournment of the meeting.
As allowed by the code of by-laws, the board of directors has
fixed the close of business on November 21, 1994, as the record date
for determining the shareholders entitled to notice of and to vote at
the meeting and at any adjournment of the meeting.
It is important that your stock be represented at this meeting to
assure a quorum. Whether or not you now expect to be present at the
meeting, please fill in, date and sign the enclosed proxy and return
it promptly to the Company in the accompanying addressed envelope. No
stamp is required if mailed in the United States. You have the
unconditional right to revoke your proxy at any time before the
authority granted by it is exercised.
By order of the board of directors.
INDIANA ENERGY, INC.
By RONALD E. CHRISTIAN
Secretary
Indianapolis, Indiana
December 2, 1994
CONTENTS
PURPOSES OF MEETING 1
VOTING SECURITIES 1
ELECTION OF DIRECTORS 3
COMMON STOCK OWNERSHIP BY DIRECTORS
AND EXECUTIVE OFFICERS 7
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS 9
DIRECTORS' COMPENSATION 10
EXECUTIVE COMPENSATION AND OTHER INFORMATION 12
Compensation Committee Report 12
Compensation Committee Interlocks and Insider
Participation 13
Compensation 14
Summary Compensation Table 14
Long Term Incentive Plan-Awards In Last Fiscal Year Table 16
Annual Management Incentive Plan 17
Executive Restricted Stock Plan 18
Corporate Performance 18
Total Return to Shareholders 19
Return on Equity 20
Retirement Savings Plan 20
Retirement Plans 21
Employment And Termination Benefits Agreements 22
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY 23
COST AND METHOD OF SOLICITATION 23
ANNUAL REPORT 24
REVOCATION RIGHTS 24
SHAREHOLDERS' PROPOSALS FOR 1996 ANNUAL MEETING 24
INDIANA ENERGY, INC.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
(317) 926-3351
PROXY STATEMENT
The following information is furnished in connection with
the solicitation of the enclosed proxy by and on behalf of the
board of directors of the Company. The proxy will be used at the
annual meeting of shareholders to be held at the principal office
of the Company, 1630 North Meridian Street, Indianapolis,
Indiana, on Monday, January 9, 1995, at 11:00 o'clock A.M.
(Eastern Standard Time), and at any adjournment of the meeting
for the matters to be acted upon under its authority. The proxy
and this proxy statement were first mailed to the shareholders on
or about December 2, 1994.
PURPOSES OF MEETING
As of this date, the only known business to be presented at
the 1995 annual meeting of shareholders is the election of four
directors of the Company to serve for a term of three (3) years
or until their successors are duly elected and qualified.
However, the enclosed proxy authorizes the proxy holders to vote
on all other matters that may properly come before the meeting,
and it is the intention of the proxy holders to take any such
action utilizing their best judgment.
VOTING SECURITIES
The Company has one class of capital stock outstanding,
consisting as of September 30, 1994, of 22,556,942 shares of
common stock without par value. The holders of the outstanding
shares of common stock are entitled to one vote for each share
held of record on each matter presented to a vote of the
shareholders at the meeting. Only shareholders of record at the
close of business on November 21, 1994, will be entitled to vote
at the meeting or at any adjournment of the meeting.
In connection with the Company's acquisition of Richmond Gas
Corporation ("Richmond") and Terre Haute Gas Corporation ("Terre
Haute"), shares of common stock of the Company were issued to
certain members of the Anton Hulman, Jr. family, certain
corporations controlled by them, certain trusts established for
their benefit and certain other persons with personal or business
relationships with the family (collectively, the "Hulman
Interests"). At September 30, 1994, the Hulman Interests
beneficially owned an aggregate of 2,806,023 shares of the
Company which comprised 12.44 percent of the outstanding common
stock of the Company. At September 30, 1994, the following
beneficial owners held more than 5 percent of the outstanding
common stock of the Company, the only class of voting securities
outstanding:
<TABLE>
Name and Number of Nature of
Address of Shares Beneficial
Title of Beneficial Beneficially Ownership Percent of
Class Owner Owned Class
____________ ____________ ____________ ____________ ____________
<S> <C> <C> <C> <C>
Common Hulman and 1,685,946 <F1> Voting & 7.5%
Company Investment
900 Wabash
Avenue
Terre Haute,
Indiana
47807
<FN>
<F1> The shares beneficially owned by Hulman and Company include
168,605 shares held by Indiana Gas & Chemical Corporation as to
which Hulman and Company, as 62 percent owner of Indiana Gas &
Chemical Corporation, may be deemed to share voting power and
investment power. As a result of the attribution to certain
persons of shares held by Hulman and Company and Indiana Gas &
Chemical Corporation, the following persons are deemed to be
beneficial owners of more than 5 percent of the outstanding
common stock of the Company:
</FN>
</TABLE>
<TABLE>
Name of Number of
Title of Beneficial Owner Shares Percent of
Class Beneficially Class
Owned
___________ ________________ ______________ ___________
<S> <C> <C> <C>
Common Mary F. Hulman 2,029,131 9.0%
Common Mari H. George 2,116,733 9.4%
Common Anton H. George 1,909,066 8.5%
Common Katherine M. George 1,692,595 7.5%
Common Laura K. George 1,909,066 8.5%
Common Nancy L. George 1,693,352 7.5%
Common M. Josephine George 1,690,879 7.5%
</TABLE>
The number of shares held beneficially by Mary F. Hulman, Mari H.
George, Anton H. George, Katherine M. George, Nancy L. George and
M. Josephine George each includes 1,517,341 shares held by Hulman
and Company as to which each, as a director of Hulman and
Company, may be deemed to share voting power and investment
power; and 168,605 shares held by Indiana Gas & Chemical
Corporation as to which each, as a director of Hulman and Company
(and, in the case of Anton H. George, as a director of Indiana
Gas & Chemical Corporation) may be deemed to share voting power
and investment power. The number of shares held beneficially by
Mary F. Hulman, Mari H. George and Anton H. George each includes
217,398 shares held by Rose-Hulman Institute of Technology ("Rose-
Hulman") as to which Mary F. Hulman and Anton H. George, as
members of the Investment Management Committee of the Board of
Managers of Rose-Hulman, and as to which Mari H. George, as a
member of the Board of Managers, may be deemed to share voting
power and investment power, and as to which each disclaims
beneficial ownership. Laura K. George is the wife of Anton H.
George, and the shares listed for her are those beneficially
owned by Mr. George. Laura K. George disclaims beneficial
ownership of all such shares. The information furnished here
regarding beneficial ownership is derived from the Schedule 13D,
as amended most recently on June 29, 1994, filed by the Hulman
Interests with the Securities and Exchange Commission, and Form 4s
filed through September 30, 1994. The filing of the Schedule 13D
by the Hulman Interests did not affirm the existence of a "group"
within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934 or the regulations promulgated under it.
ELECTION OF DIRECTORS
In connection with the Company's acquisition of Richmond and
Terre Haute, the Company entered into a standstill agreement with
the Hulman Interests. Under this agreement, the Company agreed
to cause one designee of the Hulman Interests to be elected to
the board of directors of the Company and, until the termination
of the standstill agreement (which is dependent upon the
occurrence of certain events specified in the agreement), to
include a designee of the Hulman Interests in the slate of
nominees recommended by the board at the annual meeting of
shareholders at which the term of the original designee expires.
At a regular meeting held on August 31, 1990, the board of
directors of the Company elected Anton H. George to the board and
he currently serves as a member of the board.
The board of directors of the Company consists of twelve
directors divided into three classes as follows: Paul T. Baker,
Otto N. Frenzel III, Don E. Marsh and Richard P. Rechter, who are
nominees for election with terms expiring in 1998; Duane M.
Amundson, Howard J. Cofield, Niel C. Ellerbrook and Loren K.
Evans, whose terms expire in 1997; and Gerald L. Bepko, Lawrence
A. Ferger, Anton H. George and James C. Shook, whose terms expire
in 1996. Indiana Energy, Inc. is a holding company, and each of
its directors also serves as a director of Indiana Gas Company,
Inc. ("Indiana Gas"), its principal subsidiary.
At each annual meeting of shareholders, directors are
elected to succeed those whose terms then expire for a term of
three years or until their successors are duly elected and
qualified. Accordingly, four directors are to be elected by a
plurality of votes cast at the annual meeting of shareholders to
be held on January 9, 1995.
The board of directors intends that the enclosed proxy will
be voted by the proxy holders in favor of the election of the
nominees named below for the office of director of the Company to
hold office for a term of three (3) years or until their
respective successors are duly elected and qualified. Each of
such nominees is now serving as a director of the Company and has
signified the willingness to serve if elected. Directors are
elected by a plurality of the votes cast. Plurality means that
the individuals who receive the largest number of votes cast are
elected up to the maximum number of directors to be chosen at the
meeting. Abstentions, broker non-votes, and instructions on the
accompanying proxy card to withhold authority to vote for one or
more of the nominees might result in some nominees receiving
fewer votes. However, the number of votes otherwise received by
the nominee will not be reduced by such action. If, however, any
situation should arise under which any nominee should be unable
to serve, the authority granted in the enclosed proxy may be
exercised by the proxy holders for the purpose of voting for a
substitute nominee. Certain information concerning the nominees
and the other directors of the Company is set forth below and
under the caption "Meetings and Committees of the Board of
Directors." Unless otherwise indicated, each nominee and
director has sole investment and voting power with respect to the
shares of common stock of the Company shown as beneficially owned
by him.
<TABLE>
Has been a
Principal Occupation Director of
Name and During the Indiana Gas
Business Past 5 Years and Other or the Company
Location Age Information <F1> Since
________________ ____ _______________________ _______________
<S> <C> <C> <C>
Nominees For Election Whose Terms Will Expire 1998
PAUL T. BAKER 53 Senior Vice President 1991
Indianapolis, and Chief Operating
Indiana Officer of Indiana Gas;
prior to 1991, Senior
Vice President of Gas
Supply & Customer
Services.
OTTO N. FRENZEL 64 Chairman of the Board 1967
III of National City Bank,
Indianapolis, Indiana. He is also a
Indiana Director of National
City Corporation,
American United Life
Insurance Company,
Baldwin & Lyons, Inc.
(insurance brokerage
firm), Indianapolis
Power and Light Company
and IPALCO Enterprises,
Inc., IWC Resources
Corporation and
Indianapolis Water
Company.
DON E. MARSH 56 Chairman, President and 1986
Indianapolis, Chief Executive Officer
Indiana and Director of Marsh
Supermarkets, Inc. He
is also a Director of
National City Bank,
Indiana.
RICHARD P. 55 Chairman of the Board 1984
RECHTER of Rogers Group, Inc.,
Bloomington, President and Chief
Indiana Executive Officer and
Director of Rogers
Management, Inc., and
President and Chief
Executive Officer and
Director, Mid-South
Stone, Inc. He is also
a Director of Monroe
County Bank, Monroe
Bancorp, and Weddle
Brothers Construction
Company.
Directors Continuing In Office Whose Terms Will Expire 1997
DUANE M. 69 Chairman of the Board of 1978
AMUNDSON Directors of the Company
Indianapolis, and Chairman of the
Indiana Board of Directors of
Indiana Gas.
HOWARD J. 68 Of counsel to the law 1984
COFIELD firm of Barnes &
Indianapolis, Thornburg since January
Indiana 1, 1993, and prior to
that a partner.
NIEL C. 45 Vice President and 1991
ELLERBROOK Treasurer and Chief
Indianapolis, Financial Officer of the
Indiana Company since 1986;
Senior Vice President
and Chief Financial
Officer of Indiana Gas
since 1987. He is also
a Director of Fifth
Third Bank of Central
Indiana.
LOREN K. EVANS 66 Retired. Before 1993, 1988
Columbus, Vice Chairman since 1991
Indiana and Director of Arvin
Industries, Inc. (an
Indiana company serving
global markets in more
than 100 countries);
President and Chief
Operating Officer from
1987. He was also a
Director of Irwin
Financial Corporation,
Columbus, Indiana until
April, 1994.
Directors Continuing in Office Whose Terms Will Expire in 1996
GERALD L. BEPKO 54 Vice President, Indiana 1990
Indianapolis, University and
Indiana Chancellor of Indiana
University-Purdue
University at
Indianapolis since 1986.
He is also a Director of
First Indiana
Corporation, Circle
Income Shares, Inc. and
State Life Insurance
Company.
LAWRENCE A. 60 President and Chief 1984
FERGER Executive Officer of the
Indianapolis, Company and Indiana Gas
Indiana since 1987. He is also
Director of National
City Bank, Indiana.
ANTON H. GEORGE 35 President since December 1990
Indianapolis, 1989 and a Director of
Indiana Indianapolis Motor
Speedway Corporation
(auto racing); Executive
Vice President since
June 1989 and a Director
of Hulman and Company
(grocery wholesaler and
manufacturer and
distributor of baking
powder). He is also a
Director of First
Financial Corporation.
JAMES C. SHOOK 63 President, the Shook 1983
Lafayette, Agency, Inc.
Indiana (residential, commercial
and industrial real
estate brokerage). He is
also Director of NBD
Bank, N.A. (multi-bank
holding company),
Lafayette Life Insurance
Company, and Crossman
Communities, Inc.
Other executive officers of the Company are Anthony E. Ard and
Carl L. Chapman. Mr. Ard is 53 years of age and since 1993 has
been the Vice President of Corporate Affairs for Indiana Gas.
Prior to 1993, and since 1988, Mr. Ard was Vice President and
Secretary for Indiana Gas and Secretary for the Company. Mr.
Chapman is 39 years of age and since 1986 has been the Assistant
Treasurer for the Company, and since 1987 has been the Vice
President of Corporate Planning for Indiana Gas.
<FN>
<F1> Includes, but is not limited to, directorships in
corporations with a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934 or which are
subject to the requirements of Section 15(d) of that Act or in a
company registered as an investment company under the Investment
Company Act of 1940.
</FN>
</TABLE>
COMMON STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of
common stock of the Company beneficially owned by the directors,
the chief executive officer, the four named executive officers,
and all directors and executive officers as a group, as of
September 30, 1994:
<TABLE>
Name of Individuals or Shares Owned
Identity of Group Beneficially <F1>
______________________ _________________
<S> <C>
DUANE M. AMUNDSON 15,690 (2)(4)(7)
Indianapolis, Indiana
ANTHONY E. ARD 16,047 (3)
Indianapolis, Indiana
PAUL T. BAKER 22,296 (3)
Indianapolis, Indiana
GERALD L. BEPKO 1,202 (2)(7)
Indianapolis, Indiana
CARL L. CHAPMAN 13,213 (3)
Indianapolis, Indiana
HOWARD J. COFIELD 7,704 (7)
Indianapolis, Indiana
NIEL C. ELLERBROOK 24,390 (3)
Indianapolis, Indiana
LOREN K. EVANS 2,852 (2)(7)
Columbus, Indiana
LAWRENCE A. FERGER 68,780 (3)(5)
Indianapolis, Indiana
OTTO N. FRENZEL III 17,238 (7)(8)
Indianapolis, Indiana
ANTON H. GEORGE 1,909,066 (1)(7)
Indianapolis, Indiana
DON E. MARSH 3,208 (7)
Indianapolis, Indiana
RICHARD P. RECHTER 5,283 (2)(7)
Bloomington, Indiana
JAMES C. SHOOK 34,552 (6)(7)
Lafayette, Indiana
All directors and executive 2,141,521 (1)
officers as a group (14
persons)
<FN>
<F1> Except for Anton H. George, no director or executive officer
owned beneficially as of September 30, 1994, more than .30
percent of common stock of the Company. Excluding Anton H.
George, all directors and executive officers owned beneficially
an aggregate of 232,455 shares or 1.03 percent of common stock of
the Company outstanding as of that date. The beneficial
ownership by Anton H. George of 1,909,066 shares or 8.5 percent
of common stock of the Company is discussed above in "Voting
Securities."
<F2> Some or all of the shares owned by Messrs. Amundson, Bepko,
Evans and Rechter are owned jointly with their wives.
<F3> Includes shares awarded to Messrs. Ard, Baker, Chapman,
Ellerbrook and Ferger under the Company's executive restricted
stock plan which are subject to certain transferability
restrictions and forfeiture provisions.
<F4> Includes 11,521 shares held in a trust, of which Mr.
Amundson's wife is trustee, and he disclaims beneficial interest
therein.
<F5> Includes 3,981 shares held by Mr. Ferger's wife, and he
disclaims beneficial interest therein.
<F6> Includes 1,500 shares held by Mr. Shook's wife, and he
disclaims beneficial interest therein.
<F7> Includes shares granted under the directors restricted stock
plan, some of which shares are subject to certain transferability
restrictions and forfeiture provisions.
<F8> Includes 3,774 shares held in a trust, of which Mr. Frenzel
is a co-trustee, and he disclaims beneficial interest therein.
</FN>
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company has the following standing committees of the
board of directors:
1. The Audit Committee. The members of this committee are
Loren K. Evans, chair, Gerald L. Bepko, Howard J. Cofield, and
Anton H. George. The committee makes recommendations to the
board as to the selection and retention of the independent
accountants, reviews the scope, conduct and results of audits
performed, and makes inquiry as to the differences of views, if
any, between such independent accountants and officers and
employees of the Company and subsidiaries with respect to the
financial statements and records and accounting policies,
principles, methods and systems. It further determines that
services performed by the independent accountants in addition to
the annual audit examination do not impair such accountants'
independence in performing the audit examination. Finally, the
committee reviews the policies and guidelines of the Company and
subsidiaries designed to ensure the proper use and accounting for
corporate assets, and the activities of the Internal Audit
department of Indiana Gas. There were two meetings of the
committee during the past fiscal year.
2. The Compensation Committee. The members of this
committee are Otto N. Frenzel III, chair, Duane M. Amundson and
Richard P. Rechter. None of the members is an officer or
employee of the Company. The committee has the responsibility of
formulating recommendations to the board as to the compensation
to be paid the officers of the Company and its subsidiaries. It
also administers the annual management incentive plan, the
executive restricted stock plan, and the directors restricted
stock plan of the Company. There were three meetings of the
committee during the past fiscal year.
3. The Nominating Committee. The members of this committee
are Lawrence A. Ferger, chair, Don E. Marsh and James C. Shook.
The duties and powers of the committee are to search for,
evaluate and make recommendations to the board of directors as to
nominees to be submitted annually to the shareholders for
election to the board as well as to fill vacancies occurring from
time to time on the board. In that connection, the committee is
authorized to act on behalf of the Company and the board in
receiving, giving consideration to and making recommendations to
the board respecting communications submitted to the Company from
shareholders relating to nominees for directors. Such
communications must be in writing and with respect to any annual
election must be received by the Company, addressed to the
secretary, prior to September 1 immediately preceding such
election. There was one meeting of the committee during the past
fiscal year.
Nominations of persons for election to the board of
directors of the Company may be made by any shareholder of the
Company entitled to vote for the election of directors at a
shareholders' meeting. Any such nominations must be made
pursuant to notice delivered to, or mailed and received at, the
principal office of the Company, not less than 50 days nor more
than 90 days prior to the meeting. However, in the event that
less than 60 days notice of the meeting is given, the
shareholder's notice must be received not later than the tenth
day following the date of notice of the meeting. Such
shareholder's notice must set forth, in addition to the name and
address of the shareholder submitting the nomination, as to each
person whom the shareholder proposes to nominate for election or
re-election as a director, (i) the name, age, business address
and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and
number of shares of the Company which are beneficially owned by
such person, (iv) any other information relating to such person
that is required to be disclosed in solicitation of proxies for
election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (including, without limitation, such person's
written consent to be named in the proxy statement as a nominee
and to serving as a director, if elected), and (v) the
qualifications of the nominee to serve as a director of the
Company.
4. The Public and Environmental Affairs Committee. The
members of this committee are Richard P. Rechter, chair, Howard
J. Cofield and James C. Shook. The duties and powers of the
committee are to review current policies, programs, procedures
and processes of the Company and its subsidiaries affected by
public policy and affecting the environment. It also reviews
reports from Company management on public policy and
environmental matters and monitors compliance with, and trends
and emerging policy developments in, business and environmental
regulation. In addition, the committee reports to the Board on
public policy and environmental issues affecting the Company and
its subsidiaries. There were two meetings of the committee
during the past fiscal year.
The board of directors of the Company had six meetings
during the last fiscal year. Don E. Marsh and Anton H. George
attended fewer than 75 percent of the aggregate of board meetings
and meetings of committees of the board of which they are
members. No other incumbent director attended fewer than 75
percent of the aggregate of board meetings and meetings of
committees of the board of which they are members.
DIRECTORS' COMPENSATION
Non-employee directors of the Company and of Indiana Gas
receive combined fees totaling $15,000 per year for service on
the boards of both companies. The fees are paid under the
directors' restricted stock plan approved by the shareholders at
their January 13, 1992, meeting. Under the plan, $5,000 of the
combined directors' fees paid by the company and Indiana Gas to
non-employee directors' is paid in restricted shares of the
Company. The restricted shares are issued to each non-employee
director at the beginning of their three-year term, and the
number of restricted shares is determined by dividing $15,000
($5,000 for each year) by the per share market price of the
Company's stock during the period specified in the plan.
Directors may elect to receive the remaining $10,000 in
unrestricted shares or in cash. To receive the restricted
shares, a director must consent to the restrictions in writing.
To elect to receive unrestricted shares instead of cash, a
director must provide an irrevocable written election to the
secretary of the Company before the July 1 immediately preceding
the calendar year for which the election relates.
Restricted shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution until the first
to occur of: (1) the expiration of the director's term of office
for which the grant relates; (2) the grantee's death or
disability; (3) the grantee's termination of his status as a
director pursuant to the mandatory retirement policy for
directors; (4) the involuntary termination of the grantee's
status as a director; (5) approval by a majority of the other
directors of the grantee's voluntary termination of his status as
director because of his relocation of his principal place of
residence outside of Indiana; or (6) a change in control of the
Company. In no event, however, are the restricted shares
transferable and free of restrictions before the expiration of a
six-month period beginning the first day of the director's term
of office or, if later, the date of issuance of the shares.
All restricted shares bear a legend citing the restrictions
contained in the plan. When the restrictions lapse, the grantee
is entitled to have the legend removed from any shares or
certificates. Restrictions are lifted automatically upon the
expiration of the period to which the restrictions apply. If a
director voluntarily terminates his status as such before the
expiration of the period of restriction, any shares still subject
to restriction are immediately forfeited.
The Company has reserved 71,172 shares for grant under the
plan. As of September 30, 1994, 59,709 shares remain in reserve.
Those shares may consist of authorized but unissued shares or
shares reacquired by the Company including shares purchased in
the open market. If any shares subject to the grants are
forfeited, the forfeited shares become available for reissuance
under the plan.
The board may amend, modify, alter or terminate the plan at
any time. The plan may not, however, be amended more frequently
than once every six months. Amendments, modifications or
alterations which would (1) increase the number of shares
reserved for issuance under the plan, (2) materially modify the
class of individuals to whom grants of shares may be made, (3)
change the number in which shares are granted, or (4) materially
increase the benefits accruing to grantees under the plan, must
be approved by the Company's shareholders.
Non-employee directors also receive a fee of $375 for each
meeting of the board of directors of the Company attended and
$375 for each meeting of the board of directors of Indiana Gas
attended. Each non-employee member of a committee of the board
is paid a fee of $600 for each meeting of the committee attended,
and each non-employee chair of a committee is paid an additional
fee of $150 for each meeting attended.
During the fiscal year ended September 30, 1994, Duane M.
Amundson was also paid $45,000 for his services as chair of the
board of the Company and $45,000 for his services as chair of the
board of Indiana Gas.
Under an unfunded plan adopted by the board of directors, a
non-employee director may defer all or any part of fees received
in cash until the director ceases to be a director, attains the
age specified by the retirement income test under the Social
Security Act, or until the date of initial entitlement under the
act. Interest is payable on the amounts deferred at a rate
determined by the board.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Compensation Committee Report
The compensation committee of the board of directors
recommended, and the board approved, a total compensation system
for all officers intended to provide market-sensitive base
salaries and performance-based short- and long-term incentive
awards. The purpose of the total compensation system is to
accomplish two principal objectives. First, it should ensure
that changes in compensation reflect relative business
performance. Second, it should assure that the right quantity
and quality of executive skills are available to conduct the
business effectively, currently and in the future.
It is the judgment of the committee that base salaries for
the chief executive officer, and all other officers, must be
sufficiently competitive to assure the Company's ability to
retain its current executives and attract talented additions and
replacements. It is also the judgment of the committee that it
is essential to reward the chief executive officer and the other
officers based on the achievement of short-term and long-term
goals. Accordingly, the committee recommended, and the board
approved, an annual management incentive plan as the reward for
achievement of short-term goals. The plan is based on return on
equity and, except for the chief executive officer, individual
performance objectives. For the chief executive officer, any
reward under the plan is based entirely on return on equity.
Achievement of long-term goals is rewarded through the executive
restricted stock plan which is based upon total return to
shareholders.
The stated purpose of the executive restricted stock plan is
to retain and motivate the Company's principal officers and to
increase their incentive to work toward the attainment of the
Company's long-term growth and profit objectives by providing
them with a means of acquiring or increasing a proprietary
interest. The annual management incentive plan concept is
principally intended to tie executive incentives to the
performance of operations directly under management's control,
and, secondarily, to recognize differences in individual
contributions.
In 1985, the compensation committee concluded, partly
because of the introduction of competitive forces into what had
been an exclusively regulated environment in the natural gas
industry, that it was appropriate to consider how officer pay
could be more clearly linked to business performance. An outside
consultant was engaged by the committee to independently audit
and review the salary levels of the chief executive officer and
other senior officers to determine market-sensitive salary ranges
for key positions.
In making its recommendations to the compensation committee,
the outside consultant consistently utilized a peer group of
natural gas distribution companies, determined by the Company's
investment bankers, which are similar in business orientation for
pay and corporate performance comparisons. The proxy statements
for the peer group companies were reviewed and analyzed to
establish "top five" pay data guidelines for publicly-held
utility companies. Independent surveys were also reviewed for
additional data and comparisons, and measures of peer company
size were reviewed. Key comparative performance data were
reviewed to determine appropriateness and fairness of
compensation payouts.
The results of the consultant's study prompted the committee
to recommend, and the board to approve, the creation of the
annual management incentive plan and executive restricted stock
plan. The annual management incentive plan was initiated in
1987. The executive restricted stock plan was approved by the
board in 1987 and by the shareholders at their January 1988
annual meeting. Follow-up reviews and analysis by the outside
consultant were made in 1989, 1992, 1993 and 1994 to assess the
structure, effectiveness and continued competitiveness of the
plans.
The compensation committee of the board includes only
outside directors. It is charged by the board with the
responsibility to formulate and make recommendations as to the
total compensation for the officers of the Company. During each
fiscal year, the committee meets at least twice. In fiscal year
1994, the committee met on October 29, 1993 to consider the
Company's performance during the prior three fiscal years as it
relates to the executive restricted stock plan. The Committee
met next on December 13, 1993 to consider recommendations for
changes in officers' salaries and payouts to officers and other
participating employees under the annual management incentive
plan. The Committee met again on July 29, 1994 to consider
recommendations on corporate performance levels and maximum
individual performance levels for the annual management incentive
plan, and a proposal to enter into termination benefits
agreements with officers of the Company and Indiana Gas. Also,
before the start of each measurement period under the executive
restricted stock plan, the committee considers recommendations
for total return to shareholders performance targets and goals
for that period, as well as officers' participation levels. All
recommendations approved by the committee are referred to the
board for its approval.
Detailed explanations of the annual management incentive
plan and executive restricted stock plan are contained on pages
17 and 18. Data on annual, long-term and all other compensation
for the chief executive officer and the other senior officers is
contained on pages 14 through 17. Total compensation for
Lawrence A. Ferger, president and chief executive officer, for
the current fiscal year and two immediately preceding fiscal
years is shown in the Summary Compensation Table. Increases in
salary over the three years reflect the committee's effort to
gradually align Mr. Ferger's base salary with the median base
salaries of chief executive officers of peer group companies.
Changes in Bonus reflect comparative corporate performance over
the same period. Data on corporate performance is contained on
pages 18 through 20. The Total Return graph relates to the
executive restricted stock plan. The Return on Equity graph
relates to the annual management incentive plan.
Otto N. Frenzel III, Chair
Duane M. Amundson
Richard P. Rechter
Compensation Committee Interlocks and Insider Participation
Lawrence A. Ferger is a director of National City Bank,
Indiana. Otto N. Frenzel III, chair of the Company's
compensation committee, is chairman of the board of directors and
an executive officer of National City Bank, Indiana. During the
past fiscal year, Indiana Gas had a bank line of credit agreement
with National City Bank, Indiana for borrowing by Indiana Gas not
to exceed $25 million at any one time. At September 30, 1994,
there was $5,750,000 outstanding under such line. The interest
on borrowing under such line of credit has been at a rate not to
exceed the prime lending rate at such bank which in the opinion
of the board of directors is fair. Similar bank lines of credit
agreements have been in effect between Indiana Gas and the bank
in the normal course of business for many years. Moreover,
during the past fiscal year, Energy Realty, Inc., an indirect
subsidiary of the Company, secured two loans in an aggregate
amount of $5,927,800 from National City Bank, Indiana at variable
rates of interest tied to commercially-recognized benchmarks
which in the opinion of the board of directors are fair.
None of the Company's executive officers is a member of the
Compensation Committee. Prior to his retirement in 1987, Duane
M. Amundson served as the chief executive officer for the Company
and Indiana Gas.
Compensation
The following tabulation shows for the fiscal years ended
September 30, 1992, 1993 and 1994, the compensation paid by the
Company and its subsidiaries to each of the five most highly
compensated executive officers of the Company (considering for
this purpose Mr. Ard and Mr. Baker, executive officers of Indiana
Gas, to be executive officers of the Company) in all capacities
in which they served.
<TABLE>
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Payouts
___________________________________________________________
(a) (b) (c) (d) (e) (h) (i)
Other Annual All Other
Name and Principal Compensation LTIP Payouts Compensation
Position in Group Year Salary Bonus<F1> <F2> <F3> <F4>
________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
1992 $277,146 $111,550 $23,950 $110,891 $15,377
Lawrence A.Ferger, 1993 294,257 138,573 19,300 132,939 15,971
President and CEO 1994 321,769 147,129 43,780 182,313 17,028
Paul T. Baker,
Senior Vice 1992 174,077 38,196 9,332 60,092 11,096
President and Chief 1993 193,923 63,249 6,666 72,094 12,457
Operating Officer, 1994 222,308 74,552 12,647 48,257 13,939
Indiana Gas
Niel C. Ellerbrook, 1992 144,412 47,442 12,253 70,122 9,964
Vice President and 1993 151,782 55,359 9,197 84,122 10,485
Treasurer and Chief 1994 165,769 58,605 17,635 75,207 11,708
Financial Officer
Anthony E. Ard 1992 111,023 25,588 6,567 34,604 4,919
Vice President of 1993 115,781 31,457 5,079 41,530 5,123
Corporate Affairs, 1994 125,977 33,962 9,906 44,301 9,419
Indiana Gas
Carl L. Chapman, 1992 97,938 22,317 5,281 27,583 7,659
Assistant Treasurer 1993 107,166 27,313 4,097 33,040 8,398
1994 117,489 31,197 9,837 35,994 9,470
<FN>
<F1> The amounts shown in this column are bonuses paid under the
annual management incentive plan, which is discussed below under
"Annual Management Incentive Plan". Amounts paid in any fiscal
year are attributable to the Company's performance in the
immediately prior fiscal year. Bonuses earned in fiscal year
1994 have not been determined and approved for distribution by
the Company's compensation committee. The Company's performance
over the last five years is depicted on page 20.
<F2> The amounts shown in this column are dividends paid to
executive officers on restricted shares issued under the
executive restricted stock plan, which is discussed below under
"Executive Restricted Stock Plan".
<F3> The amounts shown in this column represent the value of
shares issued under the executive restrictive stock plan and for
which restrictions were lifted in each of those fiscal years.
For instance, the amounts shown for fiscal year 1994 represent
the value of one-third of the Second Measuring Period shares
issued under the executive restricted stock plan and for which
restrictions were lifted as of September 30, 1994. After the
lifting of those restrictions, the executive officers, as a
group, held 71,647 shares, with an aggregate market value of
those shares as of that date of $1,423,986. Those shares
continue to be subject to restrictions imposed by the executive
restricted stock plan, and they represent the remaining two-
thirds of the Second Measuring Period shares and all of the Third
Measuring Period shares. The number and value of restricted
shares held by each executive officer on September 30, 1994 was
as follows: Lawrence A. Ferger-33,332 shares, $662,474; Paul T.
Baker-9,851 shares, $195,789; Niel C. Ellerbrook-13,337 shares,
$265,073; Anthony E. Ard-7,388 shares, $146,837; and Carl L.
Chapman-7,739 shares, $153,813.
<F4> This category includes Company contributions to the
Retirement Savings Plan and for fiscal year 1994 the dollar value
of insurance premiums paid by, or on behalf of, Indiana Gas with
respect to term life insurance for the benefit of executive
officers.
</FN>
</TABLE>
The following tabulation shows, by executive officer, the
awards in fiscal year 1994 under the Company's executive
restricted stock plan, which, for this purpose, is considered to
be a long-term incentive plan.
<TABLE>
Long Term Incentive Plan-Awards in Last Fiscal Year
Estimated Future Payouts
under Non-Stock Price-Based Plans
__________________________________
(a) (b) (c) (d) (e) (f)
Performance or
Number of Other Periods
Name and Principal Shares, Until Threshold Target Maximum
Position in Group Units or Other Maturation or Number of Number of Number of
Rights <F1> Payout <F2> Shares <F3> Shares <F4> Shares <F5>
___________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Lawrence A. Ferger, 28,746 - 0 14,986 29,972
President and CEO
Paul T. Baker, Senior
Vice President and 8,637 - 0 4,995 9,990
Chief Operating
Officer, Indiana Gas
Niel C. Ellerbrook 11,445 - 0 5,769 11,538
Vice President and
Treasurer and Chief
Financial Officer
Anthony E. Ard, 6,274 - 0 2,930 5,860
Vice President of
Corporate Affairs,
Indiana Gas
Carl L. Chapman, 6,834 - 0 4,117 8,234
Assistant Treasurer
<FN>
<F1> This column shows the restricted shares awarded during
fiscal year 1994 under the executive restricted stock plan. The
manner for determining the awards under the plan, and
other terms and conditions of that plan, are discussed below in
"Executive Restricted Stock Plan." The market value of the
shares on the dates of the grants is determined according to a
formula in the plan based on an average price over a period of
time preceding the grant. Dividends are paid directly to the
holders of the stock. Included are performance grant shares for
the Second Measuring Period, and the new grant shares for the
Third Measuring Period. As explained above in footnote (3) to
the Summary Compensation Table, one third of the Second Measuring
Period performance grant shares became unrestricted as of
September 30, 1994, and the dollar value of those shares is shown
in the fiscal year 1994 data in column (h) of the Summary
Compensation Table.
<F2> The restrictions are lifted in 33 1/3 percent increments on
the fourth, fifth, and sixth anniversaries of the calendar day
immediately preceding the first day of the measuring period. The
granting of additional shares, if any, and the application of
forfeiture provisions depends upon certain measurements of the
total return to shareholders in comparison to the total return to
shareholders of a predetermined group of comparable companies.
<F3> The Third Measuring Period grant shares, which are included
in the total number of shares shown in column (b) and are set
forth separately in column (e), are subject to forfeiture. If
the Company's performance compared to the peer group during this
measuring period places it in the bottom quartile, the executive
officers will forfeit all of the shares granted for this period.
<F4> The Third Measuring Period grant shares, which are included
in the total number of shares in column (b), are presented in
this column. If the Company's performance compared to the peer
group during this measuring period places it in the middle two
quartiles, these shares will vest. As indicated in footnote (1),
in addition to these shares, column (b) includes the Second
Measuring Period performance grant shares. These performance
grant shares will generally vest upon the expiration of the
relevant time periods specified in the executive restricted plan
and are no longer subject to risk of forfeiture, provided
performance goals are satisfied.
<F5> Under the executive restricted plan, if the Company's
performance compared to the peer group during the Third Measuring
Period places it in the top quartile, an additional performance
grant equal to the original Third Measuring Period grant will be
made. In that event, the shares shown in column (e) will be
doubled.
</FN>
</TABLE>
Annual Management Incentive Plan
The Company has an annual management incentive plan for
certain officers and key employees of the Company and certain of
its subsidiaries. Under this plan, annual payments are
determined on a fiscal year basis for officers and key employees
selected by the non-employee members of the Company's board of
directors ("Independent Directors"). The payments are determined
based on both (i) corporate performance, as measured by comparing
the Company's consolidated return on equity with the average
return on equity of a group of comparable companies designated by
the Independent Directors prior to the start of each year, and
(ii) individual performance, as evaluated by the chief executive
officer of the Company, based upon specific individual goals
established prior to the start of each year. However, the
payment to the chief executive officer is determined solely on
corporate performance. Under the plan, prior to the start of
each year the Independent Directors are required to adopt
performance payment ranges for each eligible employee, return on
equity targets, and a maximum individual performance payment for
each eligible employee. The performance payments established by
the Independent Directors for the current fiscal year beginning
October 1, 1994, would permit the eligible employee with the
greatest potential percentage payment to earn a payment of up to
50 percent of the employee's gross wages.
Executive Restricted Stock Plan
The Company has an executive restricted stock plan and has
reserved 541,498 shares of its common stock for issuance as
awards under the plan. As of September 30, 1994, 375,026 shares
remain in reserve. The Independent Directors determine the
principal officers to whom grants will be made and the percentage
of each officer's base salary to be used for determining the
number of shares to be granted. The principal officers of the
Company and certain of its subsidiaries are eligible to receive
grants. The plan contemplates that the Independent Directors
will make a grant to eligible officers at the outset of each
measuring period and may provide for additional grants of shares
to be made to other eligible principal officers during a
measuring period. The measuring periods are consecutively
running three-year periods. Shares were allocated under this
plan effective October 1, 1987, for the "First Measuring Period,"
October 1, 1990, for the "Second Measuring Period," and October
1, 1993, for the "Third Measuring Period."
To be eligible for a grant, a principal officer must consent
in writing to observe the restrictions imposed on the shares.
The shares may not be sold, transferred, pledged, or assigned
until such restrictions are lifted. The restrictions are lifted
in 33 1/3 percent increments on the fourth, fifth, and sixth
anniversaries of the calendar day immediately preceding the first
calendar day of the measuring period.
The granting of additional shares, if any, and the
application of forfeiture provisions depends upon certain
measurements of the total return to shareholders in comparison to
the total return to shareholders of a predetermined group of
comparable companies and upon the continued employment of the
officer during the period of restriction. For the First
Measuring Period ended on September 30, 1990, and for the Second
Measuring Period ended on September 30, 1993, the number of
shares originally granted was doubled because of the performance
of common stock of the Company compared to the performance of the
common stock of comparable companies. Among all of the companies
in the peer group, the Company was the sole peer group member to
perform in the top quartile for both measuring periods.
Corporate Performance
The following Total Return to Shareholders graph compares
the performance of Indiana Energy, Inc., with that of the S&P 500
Composite, the S&P Utilities Index and a group of peer gas
distribution companies, with the return weighted based on market
capitalization. The Return on Equity graph compares the
performance of Indiana Energy, Inc. with the same peer group.
For fiscal year 1994, companies in the peer group are as follows:
Atlanta Gas Light Co., Atmos Energy Corp., Bay State Gas Co.,
Brooklyn Union Gas, Cascade Natural Gas Corp., CMS Energy Corp.,
Connecticut Natural Gas Corp., Energen Corp., Laclede Gas Co.,
MCN Corp., National Fuel Gas Co., New Jersey Resources Corp.,
NICOR, Inc., Northwest Natural Gas Co., NUI Corp., Pacific
Enterprises, Pennsylvania Enterprises, Inc., Peoples Energy
Corp., Piedmont Natural Gas Co., Inc., Public Service Co. of
North Carolina, Inc., South Jersey Industries, Inc., Southeastern
Michigan Gas Enterprises, Inc., Southern Union Co., Southwestern
Gas Corp., Southwestern Energy Co., UGI Corp., Washington Energy
Co., Washington Gas Light Co., and WICOR, Inc. The companies to
be included in the peer group were determined by the Company's
investment bankers and approved by the Compensation Committee.
From year to year, the Company's investment bankers review
the composition of the peer group to ensure comparability among
the member companies. If in the judgment of those investment
bankers a company is determined not to be comparable, it will be
removed from the peer group, and, if possible, replaced with a
comparable company. Companies can also be removed if they are
acquired or merged out of existence. For instance, in 1994,
based upon an assessment of the comparability of the existing
peer group, the Company's investment bankers changed the peer
group used for fiscal year 1993 (the "1993 Peer Group") by
deleting Equitable Resources, Inc. and ONEOK, Inc. and replacing
them with CMS Energy Corp. and Southeastern Michigan Gas
Enterprises, Inc (the "1994 Peer Group"). The following graphs
reflect comparisons of total return for the 1994 Peer Group and
1993 Peer Group.
<TABLE>
Total Return To Shareholders <F1>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Indiana Energy 0.00% 7.18% 44.53% 67.55% 109.08% 86.58%
1994 Peers 0.00% -5.56% -1.84% 13.93% 60.21% 43.00%
1993 Peers 0.00% -2.48% 6.62% 25.06% 68.91% 53.75%
S&P 500 0.00% -9.24% 21.93% 32.98% 45.98% 49.67%
S&P Utilities 0.00% -1.01% 14.86% 29.23% 53.66% 40.56%
<FN>
<F1> The total return on investment (change in the year end stock
price plus reinvested dividends) for each of the periods for the
Company, the peer group, the S&P 500 Composite and the S&P
Utilities Index is based on the stock price or composite index at
the end of fiscal 1989.
</FN>
</TABLE>
<TABLE>
Return on Equity
1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C>
Indiana Energy 15.56% 15.22% 11.32% 11.46% 14.68%
Peer Group 11.49% 10.87% 9.79% 9.45% 10.34%
</TABLE>
(1) Under the annual management incentive plan, payments are
awarded on the basis of the Company's average return on equity
compared to that of the peer group in any fiscal year and are
paid in the first quarter of the succeeding fiscal year.
Accordingly, payments paid to executive officers in the first
quarter of fiscal year 1994 were based on the Company's
comparative average return on equity during the fiscal year 1993,
and so on, back to 1988, the first year in which bonuses were
paid.
(2) Average return on equity for fiscal year 1990 shown above
for the Company excludes the effects of the acquisition in July
1990 of Terre Haute and Richmond. For purposes of the plan,
average return on equity for both the Company and the peer group
has been computed using the simple average of beginning and
ending common equity as of September 30.
(3) The peer group return on equity by fiscal year reflects the
peer group for each of those years as determined by the Company's
investment bankers and approved by the Compensation Committee.
See the discussion above under "Corporate Performance."
Retirement Savings Plan
As of October 1, 1994, Indiana Gas merged its Retirement
Savings Plan for bargaining employees (Bargaining Savings Plan)
into its Retirement Savings Plan for non-bargaining employees
(Savings Plan). The primary objective for this action is to
reduce the level of resources required to administer two plans.
In general, the Savings Plan permits participants to elect to
have not more than 15 percent of their qualified compensation
(subject to certain maximums imposed on highly compensated
employees by the Internal Revenue Code) invested on a tax-
deferred basis in shares of the Company's common stock, a fixed
income fund, an equity fund or a balanced fund held and invested
by the trustee. Non-bargaining participants in the Savings Plan
have matching company contributions made to the plan on their
behalf equal to 100 percent of their contributions not in excess
of 3 percent of their individual redirected compensation, and 50
percent of their contributions in excess of 3 percent but not in
excess of 8 percent of their individual redirected compensation.
Also, a 2.5 percent lump sum company contribution is made to the
Savings Plan for all eligible non-bargaining employees at the end
of each year.
The Summary Compensation Table shows the value of Indiana
Gas contributions made to the plan for executive officers in the
column marked "All Other Compensation."
Retirement Plans
Indiana Gas has two defined benefit pension plans covering
full-time employees of the Company and certain of its
subsidiaries who meet certain age and service requirements. One
such plan covers salaried employees, including executive
officers, and provides fixed benefits at normal retirement age
based upon compensation and length of service, the costs of which
are fully paid by the employers and are computed on an actuarial
basis. The pension plan also provides for benefits upon death,
disability and early retirement under conditions specified
therein. The remuneration covered by this plan includes all
compensation for regular work periods (excluding overtime,
bonuses and other forms of additional compensation). Effective
July 1, 1991, the retirement plans maintained by Terre Haute and
Richmond were merged into, and became part of, the Indiana Gas
defined benefit pension plans.
Indiana Gas has a supplemental pension plan covering the
principal officers of Indiana Gas. The supplemental pension plan
provides fixed benefits at normal retirement age based upon
compensation and is computed on an actuarial basis. The
supplemental pension plan also provides for benefits upon death,
disability and early retirement under conditions specified
therein, including service requirements. This supplemental
pension plan also provides a reduced benefit to a participant who
voluntarily terminates his employment with Indiana Gas before
normal retirement age (65) but following a change in control of
the Company. The remuneration covered by the supplemental
pension plan includes all compensation for regular work periods
(including bonuses and other forms of additional compensation).
Upon retirement at or after age 65, any participant in the
supplemental pension plan will, in general, be entitled to an
annual pension for life which, when added to primary Social
Security benefits, benefits paid under the Indiana Gas defined
benefit pension plan described above and benefits under the
Retirement Savings Plan attributable to Indiana Gas
contributions, will equal approximately 65 percent of the
participant's average annual compensation during the 60
consecutive calendar months immediately preceding the
participant's retirement date. The amounts paid under the
supplemental pension plan are unfunded and are paid from the
general assets of Indiana Gas.
The following table illustrates the estimated normal annual
retirement benefits payable to a covered participant retiring at
age 65 under the supplemental pension plan and under the Indiana
Gas defined benefit plan based on the specified remuneration and
under the Retirement Savings Plan attributable to Indiana Gas
contributions. The compensation included in the Summary
Compensation Table under salary and bonuses qualifies as
remuneration for purposes of these plans. The amounts shown do
not reflect reductions, which would result from joint and
survivor elections.
<TABLE>
Pension Table
15 or More Years of Service <f1)
Amount of
Remuneration Level Benefits <F2>
__________________ ____________
<S> <C>
$125,000 $ 81,250
150,000 97,500
175,000 113,750
200,000 130,000
225,000 146,250
250,000 162,500
300,000 195,000
350,000 227,500
400,000 260,000
450,000 292,500
500,000 325,000
<FN>
<F1> The compensation covered by the plans includes the
salary and bonus amounts shown on the Summary Compensation Table.
Years of service are not used in calculating the benefit amount
under the Supplemental Executive Retirement Plan. The amounts
shown above are offset by Social Security and benefits under the
Retirement Savings Plan attributable to Indiana Gas
contributions.
<F2> Although the benefit attributable to the Savings Plan
will be paid in a single lump sum payment, it has been converted
to an annual benefit for purposes of this table. The estimated
aggregate annual pension plan benefit may be greater than the
amounts in the table to the extent that the Savings Plan benefit,
after conversion to an annual benefit and when added to the
annual benefit under the applicable Indiana Gas defined benefit
plan, exceeds the amount specified in the table. Since the
Savings Plan has only been in effect for a few years, it is
unlikely in the near future that the aggregated Savings Plan
benefit and defined benefit plan benefits will exceed the amount
specified in the table.
</FN>
</TABLE>
Employment And Termination Benefits Agreements
The Company and Indiana Gas, with approval of their boards
of directors, have entered into employment agreements with the
executive officers listed in the Summary Compensation Table.
Each agreement continues unless notice of termination is given by
either party, in which event the agreement will terminate three
years from the date of the notice. The period between notice and
termination is defined as an "employment period" under each
agreement. Each officer is entitled to compensation consisting
of the annual aggregrate base salary or salaries, and such
additional compensation as the board determines throughout the
employment period. Each agreement is also subject to termination
in the event of disability, death, or voluntary retirement by the
individual or his termination for cause.
The Company and Indiana Gas, with approval of their boards
of directors, have entered into termination benefits agreements
with each of the executive officers listed in the Summary
Compensation Table. The agreements provide that if there is an
acquisition of control of the Company (as defined in the agreements),
the Company and Indiana Gas are obligated to pay the termination
benefits under the following conditions:
bullet Within three years the Company terminates the employment of
the executive for any reason (other than cause, death, the
executive's attainment of age 65, or the executive's total and
permanent disability); or
bullet Within three years the executive voluntarily terminates his
employment for good reason (i.e., certain material changes in the
terms of the executive's employment); or
bullet The executive voluntarily terminates his employment without
reason during the 30-day period immediately following the first
anniversary of the acquisition of control.
The termination benefits payment is the executive's average
annual compensation for the most recent five calendar years
multiplied by 299.99%. The initial term of the agreements
expires on October 1, 1999 and shall be automatically extended
for one (1) year periods unless the Company notifies the
executive prior to October 1 of each succeeding year that the
Agreement will terminate at the end of the five (5) year period
that begins with October 1 following the date of such written
notice.
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY
Arthur Andersen LLP, Indianapolis, has been selected by the
board of directors as the independent public accountants of the
Company and its subsidiaries for fiscal year 1995. The selection
was made upon the recommendation of the Audit Committee of the
board of directors. See "Meetings and Committees of the Board of
Directors." Arthur Andersen LLP has served as auditors for the
Company since 1986 and for Indiana Gas since its organization in
1945. A representative of that firm will be present at the
annual meeting, will have the opportunity to make a statement and
will be available to respond to questions.
COST AND METHOD OF SOLICITATION
The cost of preparing, assembling, printing and mailing this
proxy statement, the enclosed proxy and any other material which
may be furnished to shareholders in connection with the
solicitation of proxies for the meeting will be borne by the
Company. The Company has retained Corporate Investor
Communications Co. to assist in soliciting proxies from
shareholders, including brokers' accounts, at an estimated fee of
$5,000 plus reasonable out-of-pocket expenses. In addition, some
of the officers and regular employees of the Company, who will
receive no compensation therefor in addition to their regular
salaries, may solicit proxies by telephone, telegraph or personal
visits, and it is estimated that the cost of such additional
solicitation, if any, will not exceed $500, and will be borne by
the Company. The Company expects to reimburse banks, brokerage
houses and other custodians of stock for their reasonable charges
and expenses in forwarding proxy material to beneficial owners.
ANNUAL REPORT
A copy of the Company's annual report, including
consolidated financial statements for the fiscal year ended
September 30, 1994, was mailed to shareholders on or about
December 2, 1994.
REVOCATION RIGHTS
A shareholder executing and delivering the enclosed proxy
may revoke it by written notice delivered to the secretary of the
Company, or in person at the annual meeting, at any time before
the authority granted by it is exercised.
SHAREHOLDERS' PROPOSALS FOR 1996 ANNUAL MEETING
Under Rule 14a-8 under the Securities Exchange Act of 1934,
shareholders of the Company may present proper proposals for
inclusion in the Company's proxy statement and for consideration
at the 1996 annual meeting of its shareholders by submitting
their proposals to the Company in a timely manner. In order to
be so included for the 1996 annual meeting, shareholder proposals
must be received at the Company's principal office, 1630 North
Meridian Street, Indianapolis, Indiana 46202-1496, Attention:
Corporate Secretary, no later than August 3, 1995, and must
otherwise comply with the requirements of Rule 14a-8.
By order of the board of directors.
Indianapolis, Indiana
December 2, 1994
INDIANA ENERGY, INC.
By RONALD E. CHRISTIAN
Secretary
Please fill in, date and sign the enclosed proxy and return
it in the accompanying addressed envelope. No further postage is
required if mailed in the United States. If you attend the
annual meeting and wish to vote your shares in person, you may do
so. Your cooperation in giving this matter your prompt attention
will be appreciated.
[SIDE 1]
INDIANA ENERGY, INC. PROXY/VOTING INSTRUCTION CARD
COMMON STOCK
This proxy is solicited on behalf of the Board of Directors for the
Annual Meeting on January 9, 1995.
ANTHONY E. ARD, CARL L. CHAPMAN, and RONALD E. CHRISTIAN and each of
them, are hereby appointed proxies of the undersigned, with power of
substitution, to vote all of the shares of Common Stock of INDIANA
ENERGY, INC., owned by the undersigned, at the Annual Meeting of
Shareholders to be held on January 9, 1995, and at any adjournments
thereof, on the matters and in the manner specified on the reverse
side of this proxy.
Receipt of Notice of Annual Meeting of Shareholders, dated December
2, 1994, and Proxy Statement attached thereto is hereby acknowledged.
This proxy will be voted as directed. If no direction is given, this
proxy will be voted FOR the proposal.
Election of Directors (three-year term):
Nominees: Paul T. Baker, Otto N. Frenzel III, Don E. Marsh, and
Richard P. Rechter.
You are encouraged to specify your choices by marking the appropriate
box on the reverse side.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND MAIL PROMPTLY IN THE
ENCLOSED ENVELOPE.
[SIDE 2]
x
Please mark your votes as in this example.
This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder(s). If no
direction is made, this proxy will be voted FOR the proposal.
The board of Directors recommends a vote FOR the Election of Directors.
FOR WITHHELD authority for all Nominees
1. Election of To withhold authority to vote
Directors. _____ _____ for any specific nominee(s), mark the
"FOR" box and write the name of each
nominee for whom you are withholding
authority to vote on the line provided
below.
________________________
2. In their discretion, the proxies are authorized to vote upon such
business as may properly come before the meeting.
Please sign exactly as your name(s)
appears hereon. All joint tenants
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, give full title as such. If
a corporation, sign the full corporate
name by an authorized officer. If a
partnership, sign in partnership name
by authorized person.
_______________________________________
_______________________________________
Signature(s) Date
